Then it's normal for XP to complain if you have such a small hard disk and so little free space. After removing programs, did you delete the folders where they were installed? Removing a program doesn't always completely clean up the folders.
If you don't plan on uninstalling Microsoft patches, you can delete a bunch of hidden folders in C:\Windows, e.g., $NtUninstallKB898461$. Just make sure they are patches that will never be uninstalled and not applications. Any folder that starts with $NtUninstallKB is pretty safe to delete (you can always restore them from a full system backup).
Yes, but also verify how much space is taken by the whole "C:\ Documents and settings" folder. Right-click the folder, click properties and it will display how many folders and files it contains as well as how much disk space it requires. Don't delete anything unless you know that it can safely be deleted.
I can't tell you what you should keep or delete. All I can do is suggest that you delete anything that you really don't need. Uninstall programs before deleting their folder. How much disk space does the "C:\ Documents and settings" folder require?