Four things are used to reserve disk space
1.System Restore // right click My Computer / System Restore tab / turn off or on /Settings / cut down the space used= less restore points
2.Hibernation // Display properties / Screen saver tab / Powerbutton / Hibernate tab----turn off
3.If this is an upgrade / go to Add/Remove programs and click on the Windows XP entry and remove the backup--400+ Mb
4.Pagefile will reserve 1.5 times the RAM
tweak this with care.