If it says, Not enough disk space means = No space in HARD DRIVE,not in MEMORY.
Check how much free space you have in C:
To get some free space:
1. Empty Recycle Bin.
(Right Click on Recycle bin > Empty Recycle bin)
2. Uninstall unwanted Programs from System.
(Control Panel > Add/Remove Programs)
3.Run Disk Cleanup tool to clean some space.
(Start >Programs>Accessories>System tools> Disk Cleanup)
Once you Get Some free space, Try installing again.