I thought an explanation of how this is done would be useful.
Microsoft make CDs which appear to have a lot more than 650MB on them. For instance, the MSDN CD for Windows 2000 has the Pro, Server and Advanced Server files all on the same CD.
What is actually happening is that the directory indexes have been built in a non-standard way so that where the same file exists in the three versions of Windows, the different indexes actually point to the same file on the disk. So the majority of files on the disk, which appear to be present in three copies, are actually only there once. However, routines for displaying the size of the contents of the disk don't have any way to know this, and so add the size of the files in three times. Hence the disk appears to contain much more than 650MB, but in reality it does not.
The warez CD mentioned in the thread presumably uses the same technique.
I am not aware of any generally available tools to make CDs in this way.