Re: Space Issue
Adding to what Naman & Esix said, you can also remove Old System restore points to free up space.
Windows system's makes restore points (or shadow copies) whenever there is a system wide change (installing / uninstalling software's/drivers, deleting files etc), you need only the last restore points, not all of them.
To delete old restore points : Right Click Drive C -> Properties -> Disk Cleanup -> More Options -> System Restore -> Cleanup. Then finish the Disk Cleanup too. (Warning: this will remove all the restore points except the last one).
And always give adequate amount of Disk space for your system Partition (Min 20 Gig for Win XP, Min 30 Gig for Vista/7). Windows needs space in your system partition even if you are installing Programs in a separate partition. If you are comfortable with partitioning and all, try a free partition tool like Partition Wizard Home and resize your system partition.
P.S: i don't know why people makes so many partitions in their Hard Disks, Life will be much better if you have only one or max 2 partition.