Earlier versions of the MacOS (like many OS's) have a 2GB file size limit.. that is you can't write any file larger than 2gb. The problem relates to various file-handling routines that can't handle large numbers.
Apple revised the OS and removed the limit in OS 9.x when using HFS+ volumes, so it's now powssible to use files larger than 2gb.
Unfortunately, older apps aren't necessarily aware of the change and still enforce the 2GB limit. This is why the installer reports 2GB as the available size.
It shouldn't be a problem because it's unlikely that the files you're installing are greater than 2gb... in fact, it's impossible since the version of the installer you're using wouldn't support it anyway.