java version "1.3.1-beta"
Java(TM) 2 Runtime Environment, Standard Edition (build 1.3.1-beta-b15)
Java HotSpot(TM) Client VM (build 1.3.1beta-b15, mixed mode)

The installer says "There is not enough disk space on drive c:\ to install
this package. Please free up 35.24 MB and click Retry". But I have a bit
over 4Gb of free space there (4.308.215.808 bytes to be exact).

This is the only message that appears when the installer is
unpacking itself into the temp dir. It can only put a 32Mb file in the temp
dir, then it cannot unpack it. BTW the error only happens if the free space
is in a very small range: [4Gb, 4Gb + required space -1]. If the free size
is still big enough after truncating the 4Gb, the installer works.

System information
Windows 2000 Professional, 5.0.2195 Service Pack 1
C: = Maxtor 51023H2 (9,51Gb), NTFS with 512 bytes/sector

This is FileMonitor's log:
08:51:01 j2sdk-1_3_1-bet:956 IRP_MJ_QUERY_VOLUME_INFORMATION
C:\ SUCCESS FileFsSizeInformation

Because the error happens in this unpacking stage, I would guess you might
be using some buggy version of the PackageForTheWeb thing.

Both TEMP and TMP point to c:\temp, which is not full, I have no quota
management or anything that could interfere here.

The executable is probably perfect, because I succeeded to install the JDK
after messing with disk size; then I tested the JDK and everything works
fine. It's probably not a file corruption issue.