I think I found the main problem. I have cyberlink power2go on my pc for burning DVDs. I disabled it, restarted pc, and now it seems to be burning to HDD.
The answer should be in the message that you presented
INSUFFICIENT DISK SPACE ON DRIVE FOR CREATING TEMPORARY BURNING FILES
emphasis on "temporary burning files". That points you to the "Encoded Files Folder" in the 13.0 Folder.
For Windows 7, 8, or 8.1 64 bit computer in use
You would be amazed at how much activity goes on there during a burn to.
Check Edit Menu/Preferences/Scratch Disks and Disc Encoding to verify the location of the Encoded Files Folder and how much free
space is there. Then, during a burn to, look at the activity in the Encoded Files Folder as the burn to progresses.
Please review and consider.