I ran into a problem recently where Windows Vista kept using up all of my available disk space for System Restore and Shadow Copy storage. There is a feature in the Disk Cleanup utility that lets you manually delete all but the most recent snapshot. I did that for months before I finally took the time to figure out how to set the limit.
My problem was pretty extreme. My HP Pavilion laptop has a 105 gig disk drive. I have about 47 gigs free and over a period of about a month, Vista would use it all up. Vista is supposed to use only 15% of the hard disk for this storage, but apparently sometimes that limit can become UNBOUNDED. I don't know how that happens.
To see the current setpoint for your system, go to a command prompt and type the following:
vssadmin list shadowstorage
You should see something like the following:
To change the current setpoint for your system, type the following but change what's necessary to match your system. For example, you may need to change the drive letter and storage size to fit your needs.
vssadmin Resize ShadowStorage /On=C: /For=C: /MaxSize=5GB
That should fix your problem! If you run into an issue, please let me know by adding a comment to this post.