Assuming you haven't partitioned up the drive, and you are referring to the part of the install that says something like:
Use free space on existing partition
Then here's what I'd do...
Go into windoze, run scandisk then run defrag. Once you've got it defragged pop back in the install CD and try again. Be sure you've cleaned up your windoze partition from within windoze as much as you can (clean out the recycle bin and all). While in windoze verify the amount of free space, and then try again.
When you try to install into free space again, if there is still not enough room, post back. But beware, you are pretty much running a huge chance of losing data (possibly important) regardless of how we proceed. You might (if possible) consider backing up those very important files.