The System Volume is hidden and located in the root of C:\
It may be that the amount of space allocated for System Restore is too small. R-click the My Computer icon and choose Properties. Then click the System Restore tab. This should show the available drives and their status. Highlight the C drive and then click the settings button. You should find a slider showing the amount of drive space allocated for System Restore. Mine is set to maximum 12%, but you may choose whatever amount you need.