I won't be 100% sure until you post a screen shot of your disk management- but it sounds like you are running into an issue that I came across in the past where you can no longer partition the HDD even though you have plenty of available space.
If you are having the same issue I was then your disk management will show your C drive on the right side of the drive. What I learned in this situation is that you cannot extend a drive to the left- only to the right. To fix this I ended up booting into my ubuntu flash drive and using GParted to move my entire C drive to the left side of the disk (this was done with GParted because you cannot move the C drive on the disk while windows is booted). But beware this will break your MBR and you will have to use your windows disc to boot into command prompt and repair the MBR. Here are the commands that will fix your MBR (worked for me in Windows 7 and 8):
/FixBoot. Writes a boot sector onto the system partition to start Windows
/ScanOs. Scans all disks for Windows installations and displays them to you.
/RebuildBcd. Scans all disks for Windows installations and prompts you to pick the ones you want to add to the BCD.