I've got the same issue.

Windows 2000 fully patched, latest version of Mozilla SeaMonkey 1.x, using an
Administrator account for the install.

I uninstalled the Flash Player 9 plugin before trying to install the new
version but the Flash Player 9 ActiveX control for IE is still installed. My
main drive is F: which has 20Gb of space and there is no C: drive. I see the
installer trying to use the correct directory F:\WINNT\system32\Macromed\ and
then get the same error message about insufficient free space. Tried rebooting
to see if it would help but still got the same problem.

I've submitted a support case so I'll post here if I get an answer.

In the mean time I recommend downloading and reinstalling Flash 9 Player from
the
http://kb.adobe.com/selfservice/view...4266&sliceId=1.