From a post by 100046.1274@compuserve.com (Thorsten Matzner) to alt.windows98:

This message pops up when the free space is less than a certain amount.
This limit is:
Disk Size   Threshold    Threshold
            Percentage   Space
----------------------------------------
<= 512 MB   10.0         25.6 - 51.2 MB
<=   1 GB    5.0         25.6 - 51.2 MB
<=   2 GB    2.5         25.6 - 51.2 MB
<=   4 GB    1.2         24.6 - 49.15 MB
<=   8 GB    0.6         24.6 - 49.15 MB
<=  16 GB    0.3         24.6 - 49.15 MB
<=  32 GB    0.2         32.8 - 65.5 MB
>   32 GB    0.1         32.8 - ???? MB

There is a Microsoft knowledge base article on adjusting the limits at
http://support.microsoft.com/support/kb/articles/q188/0/74.asp