I want to set my machine up to run both FreeBSD and Windows. Is it preferable to do this on 2 separate hard drives or is 1 hard drive properly configured going to be just as good (and cheaper)?

It will run fine. If it's a fresh install, the formula I found was:
1. Install FreeBSD
2. Install Windows on available partition
3. Use boot disk to go into FreeBSD are repair the boot sector that Windows wrote over.

Intuitively I would rather buy one huge disk than two medium size disks.
Or buy one medium, and save money if you prefer that ^^

Alternatively you could use VMWare to run FreeBSD inside Windows.

One OS will be run frequently, one will be run seldom (or almost never) making it a waste of space.

If you don't really care about performance on the seldom used one, use a VM.

Otherwise, use two hard drives. Install them in two different machines.

If you feel you really must have a dual-boot setup, make a FAT-32 partition on your drive and then run a live bootable CD/DVD when you want to use the OS.

Anything else is not worth the disk space.

I got my 200GB harddrive working just fine for 4 OSes.
Install windows first, or else there's gonna be problems with the bootsector if you don't make the primary partitian fat32.