Hmmm, regarding the "not enough space" message - are you converting an .avi file (or other video file) to regular DVD format? Video files can often take up more disc space than you'd expect once converted - what program are you using?
As for the 16x thing, being that the drive is USB, the actual real-world burn speed you'll be able to achieve can vary - most of the time due to the chipset on the drive's enclosure, or the chipset on your PC's motherboard. For example, my own Dell motherboard has an Intel chipset, and even with that I can't go higher than 12x on the LG drive.
What's the highest burn speed you're actually getting?
You're not being stupid BTW, these things aren't made very obvious when you're using a drive via USB, unless you dig around for the info beforehand.