That IS odd. It won't create a project no matter where you try to create it? Even the Shared folder (if you've got one still)?

You're on a home computer, so I doubt you're denied access to your hard disk. I personally haven't had problems with the patch, either, but that's just me. You probably have more than 1.33 MB hard drive space (or whatever it is to create a project). And I doubt that, say, a virus would do that.

This sound more like a problem with the program itself.. it might be corrupted or something. You may want to re-download it (after backing up your current game) and reinstall.