It's much easier to use PC directories as WinUAE hard disks, rather than hardfiles. From experience, using hardfiles results in slow(er) file access, and Windows starts to be sluggish with hardfiles once they exceed a few Gigabytes. I have a 5GB NTFS-formatted partition of my PC's hard disk dedicated to WinUAE, which contains three directories; "Workbench", "Utilities", and "Games". My WinUAE configurations map DH0 to "F:\Workbench\", DH1 to "F:\Utilities\", etc. By far the main advantage of using PC directories is that you can easily "cheat" and do things in Windows to your Amiga WinUAE directories, such as unzipping HD games straight into the "Games" directory. Then, when you boot your WinUAE Amiga, the games will be there ready for use. It also makes it easier to backup your Amiga files, and you can still access your Amiga directories if you do something that prevents your WinUAE Amiga from booting. All these things aren't possible with hardfiles.
Hope this helps!
Steve.