DosBox is one of the best emulation tools ever made.
btw: ive a problem. Yesterday, i downloaded TES 2: Daggerfall, and cant install it cuz of limited space on my HDD. It is really funny, because on my "c:" is now 16gb free, and "the installation" says i have only 230 mb on "c", so thats why i cant install the game. :(
Follow the guides on the Bethesda forum. The Bethesda provided guide with the download isn't very good. There is also an unofficially packaged version of Daggerfall out there if you google for it.
For your specific error you need to use the -freesize switch (mentioned in the DOSBox (README) on mounting your virtual c:.
DOSBox by default only shows 260meg of free space unless you specify otherwise using --freesize xxx
P.S. All of the above has absolutely nothing to do with a DOSBox interview so in the future you are better off posting a thread about your issue here on the forum or at vogons or asking the people who made the game (Bethesda).