Last two days I have been trying to do windows update for windows xp sp3 update on my dell xps. but it gives me "not enough diskspace message". I have 153 GB of free space on c drive and 4.3 GB on D drive.

Today I have been trying to install acronis 9 and it is giving the same problem.

Any idea? Can it be due to too many programs? Last week i have installed like 15-20 freeware/sharewares mostly malware/spyware removal and some utilities and burning softwares.

Try checking the drive for errors.
At a command prompt type chkdsk /f
Windows will give a message that it can't perform the task and ask if you want it to run the next time the computer is restarted. Answer yes & reboot the system.

Thanks. Window installer was corrupt so was not working.

One more question about acronis. I did the image backup last night to external drive. It shows me 22 backupdell.tib files numberd from 1 to 22. Is it supposed to be like that?

OK found it this old hard drive is fatty. changing to NT now.

Look to see if there's a setting to break-up large files. Some of these imaging programs will do this so the files can be recorded to CD.