I had this same thing happen to me recently. I deleted a few GBs of data (things that I clearly didn't need anymore) and things went fine afterward. It could be that there is insufficient free space available to move things around so that Bootcamp assistant can create the new partition without wiping the drive clean.
I *JUST* finished reinstalling Snow Leopard on my freshly-zeroed 500GB drive, and I get this error. I have 285GB free. How can this not be possible? I reformatted thinking I would fix this error.
So I downloaded Drive Genious 2 to defrag and then it says you can't defrag because the program is running from the same volume.Jesus, how many macs are there with more than one volumes? Great thinking.
IIRC, you can run Drive Genius 2 from it's disk. I used to have it on an iBook G4 and you just booted the drive genius 2 disk and could work on the Mac boot disk. You did get a legal copy of Drive Genius, right? Not an illegal torrent?