I received a similar error when setting up my web-proxy. Just enable it and it should work. It will take it a little time to setup the file system on the drive. How much of the drive you can use will depend on how much RAM you have installed. I have a 40GB ultra DMA drive with 512MB RAM on a 1Ghz P3. My maximum cache size is 29949MB (29.9GB).
It got up to 6GB with no problems. I cleared the cache and started over when I upgraded to 2.8.24 about 3 weeks ago. It's back up to 3GB now. So far, there are only 7 PC's using the proxy, so it doesn't accumulate very fast. I put a 40GB drive in because the was the smallest I could buy. The 29GB size limit is due to only having 512MB of RAM in the router.