Most people should not encounter this problem but minority like me, was
struggling a week ago and finally found the solution.
Vista installation process requires formated hard disk space in a separate
partition of the hard disk in your system or notebook during installation.
Let me explain.
If you are using a NAS as working space to store your data files/video
files/photos/etc. and do not have a extended partition formated as "D" drive
in your system or notebook, during the installation process, Vista will
complain that you do not have spare space to proceed with installation. In
my case, I re-started the installation after plugging in an external usb hard
disk in order to get the installation going. Alternatively, if I have
another spare internal hard disk, I could add that into my system. Another
alternative is to use "Partition Magic" to create a extended partition from
your current hard disk, format into NTFS or FAT32 before starting Vista
installation.
Hope this information will be useful for some of you.
Cheers