After reading a number of confusing methods, here's a simple method of creating a Users volume that works on a fresh install. Start by creating multiple partitions (using Disk Utility) and name one "Users." Install OS X on a different partition, perhaps "Mac OS." Remember that partitioning the drive will wipe any data on that drive!
After all of that is done, type the following into the Terminal (and enter your password when prompted):
sudo ditto -rsrc /Users /Volumes/Users sudo niutil -createprop / /users/username home /Volumes/Users/usernameSubstitute your short user name for username. This command tells OS X that the Users directory is the Users Partition, and creates the default folders. Log out and back in. See if your home directory exists on the "Users" partition. Also check to see if the Home button works in the Finder. If everything works, then remove the old Users directory by typing this in the Terminal:
sudo rm -dr /Users
Next open NetInfo Manager, which is in your Utilities folder. Select "users" in the second column and your username in the third. In the bottom pane, the path for "home" should read /Volumes/Users/username. Nothing needs to be changed for your primary user. If you've already created other users, select their username(s) from the third column. Set their 'home' path to:
/Volumes/Users/their_short_usernameYou will need to click the padlock icon (and enter your admin password) at the bottom in order to make changes. Repeat for all other users. Save your changes with Command-S and then quit. Log out and in as another user to see if everything worked.
Now copy your data into the appropriate folders.
ALTERNATIVE:
If you want your Users directory to live on another partition or volume (instead of being the Users volume), insert the name of the Volume or Partition into the paths above; i.e.:
/Volumes/partitionName/Users/username[robg adds: I haven't tested this hint myself. If you do, please make sure you have a good backup prior to starting!!]
Mac OS X Hints
http://hints.macworld.com/article.php?story=20030813142415898