I am guessing you used an Undo Disk and you ran out of space on the Undo Disk during processing...am I right? This is because:
You don't need any extra space on the disk you are compressing - other than a few hundred megabytes - and this free space grows as you compress the disk more and more.
Your Undo Disk, if you are using one, needs to have as much free space as the total capacity of your main disk, however. Not on your first compression pass (then, about half the free space as the total capacity of your main disk will do), but when you have really filled up your disk and are doubling it, then you will indeed need to have just about as much free space on your undo disk as your main disk (so it can really double the storage).
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