I'm having sort of the same problem. I installed XP service pack 1 on my Macbook Pro without using BootCamp/Parallels/etc, just rEFIt. Surprisingly it all worked out fine, but now that I am trying to install SP2 from a dedicated CD I got from Microsoft [my internet connection maxes out at about 12 KBps], I've hit problems. The partition on which XP resides has 80 GB free, yet the installer complains about not having 8MB for storage of uninstaller files. What gives? I'm certain that it's not a BootCamp problem, as I'm not using that software...
Please help... I have 20 days left to activate Windows, and I can't use access the internet without BootCamp drivers, which won't install unless I have SP2 installed. I'd also rather not have to completely reinstall Windows, but I suppose I will if that's my only choice. In the meantime I'll do a bit of research on slipstreaming.