No special steps are needed for installing the OS onto an SSD in Windows 7 (or 8/8.1).
A 120GB drive fills up pretty quickly by the time you put Windows 7, Office and a couple of games on.
Keep your OS and Apps (Office, web browser, etc) on your SSD so the PC boots and the apps start fast.
If you're running a media front end such as XBMC, Plex or Media portal keep the program and cache files it uses on the SSD as well. This will make navigation a bit quicker as the thumbnails and covers will be loaded from the cache on the SSD. Media can stay on the HDD.
All my media, documents and pictures I keep on the HDD and amend the documents, pictures and music libraries for each user so that they point to the relevant locations on the HDD rather than SSD.
You can specify individual directories for games when you install them through Steam. However, once you've finished with a game and want to move it from the SSD to the HDD (or viceversa) Steam will require you to uninstall it then reinstall it. I use a program called SteamTool Library Manager (
http://www.stefanjones.ca/steam/) which shifts Steam games between my SSD and HDD. It achieves this by moving the game across from your SSD to the HDD and then creating an NTFS directory junction on the SSD to point to the new location on the HDD. As far as Steam is concerned it thinks the game is located on your SSD. You can also use it to shift games back onto your SSD. I install all my Steam games to the default location, and then use SteamTool to relocate them as I require. For my non-Steam games I still install them to the default location on the SSD, but then manually move them to the HDD and create a NTFS directory junction pointing to them.