This is a really big problem. System restore(SR) seems to eat up a lot of disk space. I don't want to turn this feature off. It helped me recover from few crashes earlier, but I don't want to waste that much space also. I will give you an idea how much space it took. My disk is 232 GB with 8% set to SR. My data is about 59GB. It turns out that despite of limiting the SR to 8% (roughly 18GB) it took up 55GB of my hard disk. What the hell, this is pure junk. Over time SR should delete the older restore points, I mean it should never exceed its cap limit.
I need to find out whats going on.
Ended up reading the following articles after a quick googling on system restore.
1. zdnet blog: A smarter way to manage System Restore space on Vista
2. Lifehacker article: Vista Tip - Reduce System Restore disk usage
3. MS Help and Support: Description of the Disk Cleanup Tool in Windows XP
4. MS Help and Support: How to Automate the Disk Cleanup Tool in Windows XP
5. MS Help and Support: The Registry Keys and Values for the System Restore Utility
6. MS Technet: Windows XP System Restore from microsoft technet
7. MS Help and Support: How the System Restore Tool Handles Hard-Disk Space Usage
8. MS Help and Support: Windows XP System Restore Is Easy to Use
So it turns out that you can automatically clean up system restore files (read 3 & 4) or even do it manually. I suggest not to switch on/off SR to delete old restore points. Instead clean up the old system restore points from diskcleanup 'more options'.