Win 95 Install problem

Hi,

Am trying to install Win 95 from CD on an old PC, with 1.5GB hard drive.

I’ve booted up with a Win98 disk, to enable CD ROM support; have typed “setup” from E: to start the setup process, but am presented with a Windows message stating that… “setup is now going to perform a routine check of my PC. Press Enter to continue”
Once I have done this I am presented with a message stating that ….”Windows Setup requires 7340032 bytes available on your C: drive”

The CD I am using is a WIn95 with USB Support, does this effect things?

Am I missing something fundamental? All I wanna do is re-install Win95.

Ideas welcome.

Cheers,
Simon