I suddenly run into this problem too. After several succesful DVD 4 GB to folder burns of a project (making minor edits in between and re-create the DVD afterwards) suddenly it claims, almost immediately after starting the DVD creation process that it has insufficient room. Which cannot be true - the C drive containing temp files is 65 GB empty, the drive to contain the result even 280 GB.
Swapping from 4 to 8 GB DVD's, Best Quality or Smart Fit, it continues to issue the same error message.
Upto then I used "No menu" as option. Reverting to "Template 1" seems to make a difference.
It started to work upto 20% and then crashed. Restart and redo works again - to 20% before crashing.
Then I tried the Produce version for an MPEG2 file with preview during rendering. That completed without problems.
I haven't tried a VCD as it requires disc burning (no folder on hard dive).
Creating a AVCHD folder for 8.5GB also went without problems.
With some reservations, it seems the errors are related to the DVD production.