Download Tools

Note: Works on both froyo & GB

Source:Androinica How to Install Apps to the SD Card by Default on Android 2.2 Froyo (not for Ace)

You can find the latest version of this tutorial here. Though I will try to keep updating this thread too.

Getting Ready:
1. First you have to enable USB debugging on your Android device from Settings > Applications > Development > USB debugging.
2. You need to download and install the latest Android SDK on your computer fromhttp://developer.android.com/sdk/.
3. Install the latest java SDk if you dont already have one.

Tutorial:
1. Extract the package to the folder of your choice [Lets say- C:/android-sdk-windows/], run SDK Manager.exe

2. Close the command / windows command prompt window that opens.

3. In the new window, click on Available Packages to the left. Untick all options you are prompted to download except the USB driver option & Android sdk tools revisionx(13 as of now) & Android sdk platform-tools revision x(7 as of now) if they are there.
(Note-If you get an error message at this point, enable “Force https://…” in the Settings. From the list of available packages, select “Usb Driver package”, click on the Install Selected button in the bottom right corner and follow the prompts. )

4. Do not open Samsung Kies. Connect your phone to your computer with a USB-cable. Your OS will prompt you to install new drivers. Choose to install them from the android-sdk-windows/extras/google/usb_driverfolder. Do not mount your device; you only need to plug-in the cable.
(If you dont see this prompt, It means USB drivers are already installed or else install them manually: SAMSUNG USB drivers from samfirmware.com)

5. Run command prompt in administrator.
Type in the following after the ">" at each step (without quotations,and including spaces and capital letters) 

"cd C:android-sdk-windowsplatform-tools" 
"adb devices"
"adb shell"
A $ sign should pop up
"pm setInstallLocation 2" 
Another $ should pop up

And your done. Close everything, disconnect phone, turn off phone and then turn it back on again

Note:Now the phone will be set to install all apps you install onto the SD card. However, current apps on phone will mostly still be stored on the internal memory. This process doesnt move these apps for you, it adds the ability. So you must now manually move those already installed on the phone. Install some apps like app2sd etc.

It’s preferable to install certain apps to the main memory, since it will take a while before the SD card becomes available when you start your phone. Applications installed on the memory card will also be unavailable to the system each time you mount your phone as a disk drive. 

In general, apps that integrate with the Android OS and that often run in the background is better to install on the internal storage, while games and most other applications will have no problem chilling outside on your SD.

Widgets should essentially be installed on phone memory.

Update:
From what I have come to understand (correct me if I am wrong), Each app will store some .odex files on phone memory to speed up the boot process. 
So dont complain that phone memory is getting lesser after each install. Though if you couldve installed 40 apps before now maybe 150+ and still have 30-40 mb left. (depends on what kind of apps you install).

Darktremors a2sd scripts deodex the apps and COMPLETELY move the apps and cache to sd card but you will need to root and run the scripts.
How to install Darktremors a2sd on Froyo!!
Though an easier way will be to install a custom rom.


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