Using MBR style partition scheme the active partition is also the "System partition" - the System partition is where boot related files are expected to be.
There is no problem for System partition being 125GB.
You could even make your current C: partition active (and System), write boot files on C: and delete the 125 GB partition.
Use "bootsect.exe" to write boot sectors and MBR.
Use "bcdboot.exe" to re/create boot related files on any partition (but they have meaning only on active partition!)
You could also optimize System partition (move files to begin of partition and then shrink it to say 500MB if you like. Usually Windows reserves 100MB for the System partition when installing to unformatted disk, and creates a separate recovery partition.
See Microsoft recommendations about "Configure BIOS/MBR-Based Hard Drive Partitions"
Also "BIOS/MBR-based hard drive partitions"