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That error usually occurs when you're installing from a read-only source such as a CD. It's a poorly-written install routine. When the PC needs to write some files during the install process, it can't and fails with the misleading "not enough disc space" message.
You say you've downloaded the software and get the same message. You may need to manually create the directory it's trying to write to. Study the exact wording of the error message. It should give you a clue as to where it's trying to write. Create the directory it wants and that should fix it.
Having Nero installed can cause this problem. This is from the Microsoft Knowledge base. There are some other programs that can cause this problem. Search "Lifecam Program" I believe I have tracked the problem down to this. I have not uninstalled Nero yet, But Nero crashes when trying to launch it video utilities. So at this point I am presuming that tere is a conflict.
hi, well xp is a better OS than 98 ( i think) ... few things you should know that xp is pre-installed with lotsa drivers..but on the other hand 98 isn't .. so each time you put in a USB device you need to install the driver for that device( eg your camera, pen drive etc...) . this drivers would be there accompanied with your device. hope it helps regards bzoy