The reason why you may not have enough disk space even though Civ IV says it needs 1.7 GB and you have 1.88 GB free could be due to the re-definition of what 1 GB means.
In geek speak, 1 GB is 1024 bytes * 1024 bytes * 1024 bytes = 1073741824 bytes (I think that's correct; my point is that 1 GB is more than 1 billion bytes).
In order to be more "user-friendly", some systems, or some programs within systems, will arbitrarily redefine 1 GB to mean 1 billion bytes when displaying their output.
Windows is notorious for not complying with standard definitions, in the name of "usability" -- even if there is no good reason for the redefinition. Although I don't know in this instance in particular, I have had Windows programs in the past report using the redefined 1 GB = 1 billion bytes instead of the proper definition.