it might be that it is looking inyour / (ramdisk) not much room there.
you will have to do some "tricks" to get that driver installed, using mount-bind,-o loop, some links...
I have no ATI card so I can not be very precice,
Basicaly you need to find out WHERE the files go and make images in your permanent home that you format and mount as "target" for the files, see them as "virtuall mini partitions". this should work, might be somewhat overly complicated, but should work (atleast with some tweaking).
if you then edit /etc/fstab and save the config... chances are good it will work ok even after reboot.
but as always there likely are more ways in linux, I would guess a remaster would be another way, likely many other.