There are two issues here: the installation and the crash.
The first problem, the installation complaining about not enough free space, is because the version of Installer on the Wordworth disk is too old. It can't properly detect the amount of free space above a certain amount, so the number overflows and wraps around to a negative number. It can be overcome by changing the default tool on the install icon to a newer version of Installer (at least v43, see Aminet). Either point it to a newer version on your hard drive or replace the Installer on the Wordworth disk (a copy of the disk, of course). The other options are to install to a smaller partition, as you did, or to fill up a partition to the point where there's less free space.
The second problem, the crash, will be trickier to diagnose. As TribbleSmasher suggests, always install in Expert mode so you can see exactly what the installer is doing. Not all install scripts respect this, however, and will copy/replace files without your intervention. I seem to recall that the Wordworth install script does just that, and replaces a number of system files with versions from OS2.1 or 3.0. Conflict between those old files and the newer OS could be causing the crash. Examine the Wordworth disk(s) to see what system files are on it, then check your SYS: partition to see if those files got copied there. If they did, replace them with the newer versions from the 3.1.4(.1) disks.
Also, use SnoopDos to monitor what files are being called. Then you should be able to see exactly at which point the system is crashing (and which file is responsible).
One other thing, make sure you're not hitting the infamous MaxTransfer problem. I think that was finally solved in 3.1.4, but I'm not certain. Check the MaxTransfer setting in HDToolbox to be sure.