Tried Reducing System Restore Size?
The System Restore volumes will frequently use up space in much the manner you've mentioned. Every new restore point uses up space on the hard drive. RIGHT click on "My Computer", choose "Properties", then click on the "System Restore" tab. Once there, click once on the "C" drive to highlight it, then click on the "Settings" button. Move the system Restore slider to a smaller number, maybe 5 - 8 %, or so.. It should free up a little space..
In addition, to eliminate all but the most recent restore point, click on Start-Accessories-System Tools-Disk Cleanup. Once there, select the "C: drive" when asked, then click on the "More Options" tab.. At this point, click on the "Clean up" button in the "System Restore" section and follow the prompts to let the computer remove all but the most recent SR point.
Hope this helps.