To free up some space, I wanted to move my Picasa photos from one drive to another. Unfortunately, there's no easy way to do this within Picasa and if you do it manually you'll loose your Albums and the metadata that links each photo with its backup in the Originals directory.
So in Windows Explorer, create an empty folder on the new drive. In Picasa, mark it "Scan Always" in Tools > Folder Manager. Then in Windows Explorer, copy an image [preferably one that has not been modified] from the old folder to the new one. Picasa will automagically add this photo and the new directory with show up under Folders on the left sidebar. Now in Picasa, you can select all the remaining photos in the old folder and move them to the new one. Thus preserving Albums and precious metadata!