Out of disk space when exporting a 10 min video!

I am trying to export a FCPX project that is roughly 10 mins long. It has transitions, text, music etc. I have a MBA 4gb, 120gb SSD, Intel i5.

The problem is, about half way through it crashes saying that the startup disk is nearly full, even though I have 40gb free before starting.

I have even tried moving all the events and project to an external drive and exporting the file to the same drive but it doesnt make any difference.

The confusing thing is, I exported another file a week early, about 10 mins long and that worked fine. I have the same amount of free disk space as I did then.

Any ideas? Is there a way to set FCP to use the external drive exclusively and not the startup disk?

I am trying to export using the following compressor settings: (It still fails if I use a lower quality export)

Name: High Quality

Description: No description

File Extension: m4v

Estimated size: 2.25 GB/hour of source

Device: Apple TV HD

Frame sync rate: 5 seconds

Video Encoder

Width and Height: Automatic

Pixel aspect ratio: Default

Crop: None

Padding: None

Frame rate: (100% of source)

Frame Controls: Automatically selected: Off

Codec Type: H.264

Multi-pass: On, frame reorder: On

Pixel depth: 24

Spatial quality: 50

Min. Spatial quality: 50

Temporal quality: 50

Min. temporal quality: 50

Average data rate: 5 (Mbps)

Maximum data rate: 14 (Mbps)

Audio Encoder

Sample Rate: 44.100kHz

Channels: 2

Bits Per Sample: 16

AAC encoder quality: high

Data rate: 128 Kbps