I think the problem is that you are booting off the CD. When you boot off the CD, your RAM ( or memory ) is being used as a RAM DISK, that is where the OS, and file system, and even your desktop, is being stored - in memory. You only have so much memory, and thus, the "disk full" error you are getting, is that you have exceeded the RAM that is being used as your disk drive...

You could create a folder / directory, on the file system, but, then again, that will still only be in your current RAM, still. What you need is a "physical" hard drive. And preferably not NTFS, unless you want to follow the instructions that your error message stated... Which, "might", get your NTFS working ( no promisses, I've never worked within NTFS, nor from the Linux side )