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Please check the free disk space on you hard drive(s).
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"Scratch disk" is a kind of disk working space that Photoshop uses to perform some operations that would make your PC to go out of memory. By default the scratch disk is C:, so you need enough space there. If you changed the scratch disk location, you need to look at the assigned disks.
As a first aid, do a disk clean-up and try deleting temporary files and empty the recycle bin. See here: https://neosmart.net/wiki/disk-cleanup/
Do not delete files manually, use the tools of your OS.
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While that message could be a result of low disk free space, that error message can also be caused by the fact you actually have too much free space on your drive.
That's because Photoshop 7 cannot see free space on a drive if it's more than 1TB and will give the "Scratch Disk Full" message. This was fixed in photoshop cs and later versions.
Chack and see how much free space is on the drive where photoshop 7 is installed.