You will have to free up some space (~5GB) in your HDD first. Here free space doesn't mean that you have some free space in one of your NTFS or FAT32 partition it is the unpartitioned space on your HDD. You can make this free space available by deleting some partition or you can use partition magic to make free space from your FAT or NTFS partion.
You can check the free space from the disk management console. Type 'diskmgmt.msc' in RUN console for DM in XP.
Once you make some free space (unpartitioned space) on your HDD, you can easily continue with the installation of RHL. If you have any difficulties while installation process, let us know we will try to help you.