I set up DPM2007 with SP1. The disk has 1.36tb free but when I go into the
DPM MMC is showed used space at 99% and unallocated space at 1%. The
protection wizard stops with the message, "There is insufficient free space
in this storage pool for this protection group. To increase the free space,
cancel this wizard and add disks to the storage pool". In disk mgmt I have
99% free space. The disks are in a direct attached storage Dell MD1000 and
were set up and formatted with the Dell Open Management software. The wizard
will not proceed because DPM sees most of the space as used. The array is
configured as a simple volume.

I just had this problem too. Make sure that your disk does not have a volume on it. I had mine set as the I drive, but once I went into Computer Management and deleted the volume, DPM saw 100% of the space.