Do you have any Norton software installed? Often the Recycle Bin is protected when Norton is installed so that also needs to be emptied as well.
Presumably you've emptied the Recycle Bin anyway.
The temp folder that Nero refers to is
C:\Documents and Settings\"your username"\Local Settings\Temp\
But as I've pointed out before this isn't as important as you seem to think. As Nero tries to open it's files there it checks to see how much free space the entire disk has. It is not checking that folder.
DVD = DVD5 in my earlier post.