A. Hard linking is a new feature introduced with USMT 4.0. It stores the information gathered during the USMT scanning phase on the local hard disk (/hardlink) instead of copying to a network location, avoiding a lot of network traffic and the requirement for network storage. Note that hard linking is only used if the partition has at least 250MB of free space. If data that's being captured exists on multiple partitions, a USMT hard link store will be created on each partition. This is the optimal solution avoiding the time associated with copying data between partitions.
The path you pass to the command
Scanstate /hardlink <path>
is important, because as data collected from non-NTFS volumes, it's stored in this master migration store.