You may have too many restore points. Go to your accessories, system tools and disk cleanup. Initialize the disk cleanup and on the tab, more options, check keep only the last restore point. Disk cleanup will offer you other methods of liberation disk space.
If you have a burner, burn all the data you don't necessarily use (like mp3, movies, etc.) and then delete them from your disk. If you are so loaded, maybe you should consider getting another hard disk.