You need to ascertain if you do have free space, or are you being "lied" to? So Open My Computer, right-click your C: drive, Properties, Look at the pie chart & note how much free space you have. Nearly full or not?
Next thing to do is a disk clean up. Open My Computer, right-click your C: drive, select Properties and then Disk Cleanup. Permit those boxes already ticked - but ensure 'recycle bin' is selected.
I suspect your recycle bin is full. Of course - once you empty it - you cant 'undelete' anything in there - so ensure there is nothing in the bin you want first by opening the recycle bin and having a look. (Think of the recycle bin as your waste basket - and emptying it as the equivalent of throwing the contents into the trash lorry !)
Next - trash any files you don't want - old movies - etc.
Trash (using add/remove programs) any old software you no longer use.
Once you have tidies up the drive - defrag it (from the tools button on the drives properties sheet)
Hope this helps