ANSWER:

Assuming that your hard drive is mounted with the same drive letter always, you can move Picasa2 and Picasa2Albums from directory C:Documents and Settings[user profile name]Local SettingsApplication DataGoogle to external hard drive, and create links to them in that folder named correspondingly. This keeps you from copying caches folders back and forth.

Note that windows shortcut doesn’t work in this case – you should create a symbolic link. This can be done with Far manager for example.

by de1mar from http://superuser.com/questions/423801