Congrats, you've found another one of the ugly little things buried within Photoshop.
Mondo is an Adobe Photoshop plugin development framework. Plugins are used for many functions in Photoshop (and even in Bridge), and many plugins are built on this Mondo framework. MVM stands for "Mondo Virtual Memory", from what I have read, and it seems that these plugins use their own system of memory management completely separate from the main Photoshop virtual memory & scratch drive system.
Cutting to the chase, unfortunately it appears that there is no way to directly configure or control where these MVM files are stored. The Mondo framework seems to have some hardwired memory management behavior that's incredibly obsolete, buggy, poorly thought out, or all 3. You can spend hundreds of $ on 64-bit OS, loads of physical RAM, SSD's or fast disks like Velociraptors or RAID stripes. And then spend dozens of hours researching and tuning Photoshop, Windows, etc. And the MVM plugin framework will ignore all of that and just spew its temp files all over the place, across any mounted storage devices it can see on your system. Some of these MVM files can be several GB in size for certain plugins, and while they're usually cleaned up when Photoshop exits that doesn't always happen. So these large files may slowly accumulate over time.
There's loads of discussion of this situation around the web, including on the Adobe support forums. On the latter, there's some of the usual "ignore the reports", "blame the user", "it guaranteed can't be our software's problem", and "distract them with an irrelevant tangent" that we've come to know and love from most vendor support services.
See this thread for example, for a good summary of reports of the issue and how various tactics don't fix it:
http://forums.adobe.com/message/3257006
The only credible info I've been able to track about some kind of method to the madness of where these MVM files appear, is that it seems to correlate with distributing them according to storage volume free space. Unfortunately what this means is that if the majority of your free space is on slow devices, or worse external ones like USB drives that go to sleep, performance will suffer when the Mondo framework fires up. And it can fire up even when you don't think you're doing anything to trigger a plugin, because some plugins may initialize themselves when you just launch Bridge or Photoshop, or do something as simple as open a certain type of file like a .PNG image.
At least in the above linked thread, by August of this year an Adobe developer finally acknowledged that "it may be a bug", and that "someone else is looking into it".
The 2nd item you describe (setting PS scratch to the C: drive but then having it actually go to another device corresponding to the setting of the Windows TMP folder), is a new one on me. But I guess I'm not surprised by it, either...