There was a problem with the update for QuickBooks Pro Mac for version 2006 and 2007. The update was prompting that “there is not enough disk space to install.” If this message is displayed, click the No button. DO NOT install the update. It could remove files from the desktop folder of your computer.
Intuit has resolved the problem that caused this on the server. Do not install the update if it prompts that there is not enough disk space. Close and re-open QuickBooks and it should no longer prompt you to install the update. The latest release for QuickBooks Mac 2006 is currently R4 and the latest release for QuickBooks Pro for Mac 2007 is R6.
Intuit is working on a way to help customers restore the files they lost and/or repair the functionality of their Mac desktop.
More details, including contact info, here.