Since virtual drive is created on the C drive in PC, available size on the C drive limits the size of the virtual drive.
My Qs are (1) Does crypto allow virtual drive creation outside of C drive for example on an external SSD drive?
(2) If does not allow external SSD, how to make use of large available space on google drive with limited C drive size?
The virtual drive is not created on C because ist virtual.
I assume you mean the vault (the encrypted files).
You can store your vault wherever you want. Just choose the desired location during the vault creation process, or move the vault to your desired location. Yes, this can also be an external HD
Please notice. If your vault is not on C, but shows the capacity of C, then you are facing this issue
To avoid this, please go to your settings and change the volume type to something other than WebDAV.