chelle2709 - The error really doesn't have anything to do with how much space is on the computer. It's a very misleading error message. It means that the program is failing. If the program was already installed and suddenly doesn't work, then something has changed so the program can't work any more. It could be that the program was hard-coded to use a now obsolete version of Java, depended on some .dll that has now been updated, or a host of other factors.
If the program wasn't installed and you are trying to install it, perhaps the program is very old (Windows 95 perhaps?) and not designed for Windows XP. If the program is new, you should contact its maker's tech support. If the program is very old and has previously worked before, uninstall/reinstall it. If the program is very old and you are just trying to install it, then you should probably forget about it and buy a new similar program for your kids. I remember having an I Spy program for my kids that ran under Windows 95 and if this is the same one, I would just toss it and move on.
So you'll need to give a lot more information about the program, its age, and your exact situation.
MS-MVP - Elephant Boy Computers - Don't Panic!