Windows 7: Steam install of FM13 - getting error "not enough disc space"

Recently bought FM13 and had it installed on Win XP without any problems.

Uninstalled FM13, upgraded my PC to Windows 7 and then went for a new install. I'm now being told that there isn't enough space on my PC - there's 226Gb of free space!! FM13 only requires 5Gb.

FM11 (without Steam) installs without any problems.

I've tried everything I can think of:
1) installing to C:\Steam, as opposed to C:\Program Files (x86) etc....
2) copying the entire disc locally to eg C:\Steam and retrying the install
3) running the entire install from Steam as opposed to the CD/DVD drive
4) uninstall, re-installing, making sure I'd cleared out all registry settings.
5) selecting Steam.exe, right clicking and selecting "run as administrator"

This is the error I've been getting: https://www.dropbox.com/s/d2mxfsis6n...am%20Error.jpg

I've checked the logs and in the contet log I found the following:
Update job for app 207890 canceled: Failed to preallocate file "C:\Steam\steamapps\downloading\207890\helper.dll" (3758080 bytes) (Not enough disk space)

I think it's windows 7 permissions and I think I need to set my user as having full control down the folder structure from C:\Steam. However, when I set this and say cascade to child folders, it doesn't cascade.

I might be wrong with the above thought, so would appreciate any other suggestions.

Thanks in advance.