Don't use the game's own installer - use
WHDLoad instead.
The reason you're getting the out of space error is because you actually have
too much space for the older software to understand. The free space value is probably overflowing a 32bit buffer and wrapping around to a negative value, which is why it thinks it's full. This happens with installing some other programs, too. It's a bug in old versions of Commodore's Installer, and many other old tools as well.
If you really insist on using the original, non-WHDLoad version of the game, there's a workaround. I'm assuming the install routine uses Commodore's Installer, and that you have v43.3 or newer of said utility in either C: or SYS:Utilities on your hard drive. First, make a copy of the Premier Manager disk. Then, on the *copy* of the disk, change the default tool of the HD install routine to just plain Installer, or C:Installer or SYS:Utilities/Installer, whereever you have it on your hard drive. The game's original default probably points to :C/Installer or some other location on the floppy disk. Changing it to the hard drive version (and thus, the newer, bugfixed version) will probably solve your problem.
If the HD install routine uses some custom tool, you're probably out of luck. You can install it to a smaller partition, or maybe RAM:, and then move it. If you don't have a smaller (2GB) partition, or if RAM: doesn't work, WHDLoad is your only option short of repartitioning your hard drive.
EDIT: Actually, there's one more option: installing to a small hard disk image file. But it's very complex to set up and I'm not even sure of the details. There's info kicking around the net if you want to try this route.
