Question: What is the Photoshop Scratch Disk? How Do You Fix "Scratch Disk Full" Errors?
Answer: The Photoshop Scratch Disk is referencing the virtual memory or memory swap space on your hard drive when your system does not have enough RAM to perform an operation. You can change drives that are being used for your scratch drive and if you use a second drive other than the one your operating system is on for your scratch drive it should run more efficiently.
If you have a problem and Photoshop crashes in the middle of an editing session this can leave some pretty large temporary file behind on your scratch disk. Photoshop’s temp files are typically named ~PST####.tmp on Windows, where #### is a series of numbers. These are safe to delete.
Other notes from http://graphicssoft.about.com/od/photoshop/f/scratchdisk.htm gives these hints:
Clear Disk Space
If you're getting an error message that the scratch disk is full, it usually means you need to clear some space on whatever drive is defined as the scratch disk in Photoshop Preferences, or add additional drives for Photoshop to use as scratch space.
Defragment Your Hard Disk
It is also possible to get the "scratch disk is full" error, even if the scratch disk drive has free space. This is because Photoshop requires contiguous, unfragmented free space on the scratch disk drive. If you are getting the "scratch disk is full" error message and your scratch disk drive does show a good amount of free space, you may need to run a disk defragmentation utility.
Scratch Disk Errors When Cropping
If you are getting a "scratch disk full" error when attempting to crop an image, it's likely that you inadvertently have size and resolution values entered in the options bar for the crop tool, or you entered values in the wrong units. For instance, entering dimensions of 1200 x 1600 when your units are set to inches instead of pixels is going to create a huge file that could trigger the scratch disk full message. The solution is to press clear in the options bar after selecting the crop tool but before dragging a crop selection.