How much free space DO you have?
In my experience, if you get the message with the 'please try again', you should try wiping the surface of the DVD with a soft, dry cloth, and try again. I have had some systems fail this way multiple times. On my own personal system (5 year old iMac), I tried the install 8 times before it finally completed successfully. Not everyone has my patience.
In your case, you can't take out the extra memory, because tiger won't install with only 128 MB.
Something that can work, if you have access to a newer Mac, is a target install. connect the two systems with a FireWire cable. Boot your iBook while holding the 'T' key, until you see the blue screen with the bouncing FireWire symbol. Boot the other Mac with the Tiger DVD, and start the installer, choosing YOUR hard drive for the install. This process works great, and you bypass possible problems with an internal DVD drive.