Regarding the drive issues, this location is initially determined by the Unity Engine and that is pretty standard. Being a tech weenie I personally do not like the choice, but it is what it is. However, you can override it. Check the manual, which is online as well:
http://killerbeesoftware.com/edce/code/manual/EDCE.pdf
and around page 93 look for "Changing The Game Data Location". Also make sure you know the difference between the "Game Reference Directory" (where you put the game) and the "Game Data Directory" (which is what you want to move).
In regards, to portability of the unit databases from EDEE, that is not possible at this time. EDEE is different, and there are actually more features in an EDEE DB than in an EDCE. The development of the features of EDEE's DBs was a process over the 15 years of the game's life, with numerous change requests and added patience. For EDCE, we have to start that process somewhere, and here we are.
I would say that if you have a DB you used often for EDEE, build an EDCE DB as you did the former, which is one unit at a time over time. If there is a feature that appears missing, let me know and it can be discussed. But in terms of Unit DBs from EDEE into EDCE, there is no conversion path except you seeing what works and what doesn't, and it is possible that only EDEE will work the way you want it to.
Regarding Unit Modification in general, this is an extra part of the game program and not the game itself. If someone's perspective is modification is the game, then I can see the disappointment. Hopefully over time I hope it will develop more, but at the moment it is in fact quite bare bones. I have made several posts over time that there is only so much that one developer can do, and rather than not have this feature because it cannot be perfect for everyone, I have exposed it so that people that want to take the extra effort can modify the game. But like augmenting the source code, or creating graphics, there is a level of effort needed to undertake to make those changes. If anyone does not have the patience for that, I would recommend not trying to make modifications, as I can see it would be an exercise in frustration.
The EDEE format was nowhere near standard to anything and confused a lot of people, this format is more legible. The EDCE files do not have an xml extension, because they are not standard xml. Non standard xml is used for efficiency and portability reasons. However, some one that understands XML should be able to convert the text file to standard xml for the purposes of putting it into the "standard readers", and then convert it back when they are done. However, I have not tried this and I do not know if the "standard readers" would output the file in the format the game program is expecting as CDATA is a key piece of every text element. One can also take a free editor like Notepad++ and do simple string replaces to build the appropriate syntax.
--Mark