Is it XP SP2? Do you have all the latest updates applied to it?
If you do, that'll be around 4GB gone to just the C:\WINDOWS folder, and a large amount will be taken up for hibernation file, system restore and the page file, so in the end you'll be left with very little free space.
Right-click C:\Program Files and choose "Properties". See what "size on disk" it shows the folder to be. Then do the same for C:\Documents and Settings and let us know what you find out.