Run the Disk Cleanup tool and use the "More Options" tab to remove all but the most recent restore point.
You don't really want Restore Points going back too far as they will more than likely uninstall all programs or settings you have changed since your "go back point" causing you more problems than it may fix.
The average restore point is 25mb+ with a "first in, first out" policy on restore points. They contain mainly deleted or altered exe, dlls, shortcuts and a registry backup and user profile details. They do not contain users data.
Keeping restore points for a week seems adequate. Amount of disk space used depends on the size of your restore points. Some restore points can be as large as 500mb after major alterations to a system (ie a new service pack or several hefty program installs, or running SFC /Scannow).
Do you use Hibernation? If not turn it off to save 500+MB.
This program might be useful for any diagnosing.
Relocating Hard Drive Capacity and File Compression
thread779-939540
something is cosuming the hard drive freespace
thread779-810374
Where is my disk space?
thread779-719423
Delete Offline Flies
thread779-816712
316505 - Windows XP Does Not Recognize All Available Disk Space
How to Locate and Correct Disk Space Problems on NTFS Volumes in Windows XP(Q315668)
The Default Cluster Size for the NTFS and FAT File Systems(Q314878)
Hard Drive Space Monster
thread779-832784