Thanks for your post.
Generally we only recommend having Trace turned on if you're looking for a specific issue on a problematic server as it can use up to 5% extra CPU usage and potentially more memory. It can, as you've experienced here, also log a large amount of data which effectively becomes useless if you're searching for a specific problem.
There isn't a way of changing the place in which the files are logged, and it can't be reduced.
For more information on collecting trace data please click the following link;
http://www.red-gate.com/supportcenter/C ... L_Response
The new version - SQL Monitor - initially gathers the information collected in a trace file when Trace is turned on, however after this point it routinely overwrites it once the data file gets too big.
Also, for your information - if you still have active support and upgrades attached to your SQL Response license, you're eligible for a complimentary upgrade to the SQL Monitor which has many new features and benefits. You can check it out here - http://www.red-gate.com/products/SQL_Monitor/index.htm
If you email our sales team at email@example.com
they can look into this for you.