On re-reading, it sounds to me like you already have stuff in your itunes, and you're trying to add more that you've got from an external source, probably saved as a folder on your desktop?
Correct?
Then, when you try to copy all this into your itunes library, you are getting an error saying you don't have enough space?
Right?
Obvious reason for this is that you don't have enough space
This is because, if you have, say, 10GB of files on your HD, and try to copy them into itunes, itunes will duplicate these files into home folder>music>itunes>itunes music, and, as such, you'll still be using the 10gb on your desktop, AND 10GB on the itunes folder.
If this is what is happening, simply copy them in in blocks of a few hundred songs, and, once they are copied into itunes, delete them from the folder on your desktop (you will still have the copy of the song in the itunes folder so no longer need them on the desktop)
does that help?