Windows Server 2003 Installation. Error "not enough space for temporary files"

I'm trying to install Windows Server 2003, but I keep on getting an error:

This computer does not have enough space for temporary files. Windows installation needs at least 455 megabytes (MB) of space on any partition for temorary files. To install Windows, free enough space and restart the installation.

Error code: 0x80070103

I have 97.39 GB of free space in drive C. Why I am getting this error?

Here's a screenshot of diskmgmt

For Standard Edition it says a minimum of 1.25 GB free space. I have 97GB Free, but I still can't install Windows Server 2003.