This error suggestes that the database transaction log has grown beyond maximum size or disk is full. The odds are that you have a fairly large database reaching a few GB. There are 2 possible solutions here...
Since importing an Organization in CRM 4.0 will involve a lot of work, the transaction log occasionally tends to become unmanageably large. First try to lower the log size.
In the database properties screen set "Recovery Mode" to simple:
If you don't have at least Update Rollup 8 installed then it may be time to do so now. This provides a new and improved Organization Import functionality as described here (http://support.microsoft.com/kb/977867). Remember that you would still need to add and set the new registry key "OptimizeOrgImport" manually.