PW change fail, no space left on device?

I have a PB I built about a year ago out of a tp-mr3040. it has been sitting with no flashdrive in it powerd off for months. i decided the other day to get it up and running as i live downtown now. i tried several flashdrives in it with the "install" folder i copied from the original flash drive before i repurposed it, with no luck. i can see that it is broadcasting the ssid but it wil not assign any device a ip address.i decided to just reflash the whole thing, but the ssh PW i has wrote down wouldn't work. i finaly got it into failsafe mode and gianed access via telnet. but recieved errors saying no space left on device to change the password. please help, am i doing it wrong. i would hate to have to junk it. below is copy from my term...
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zule@zulebox-NULL:~$ telnet 192.168.1.1
Trying 192.168.1.1...
Connected to 192.168.1.1.
Escape character is '^]'.

=== IMPORTANT ============================
Use 'passwd' to set your login password
this will disable telnet and enable SSH
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BusyBox v1.19.4 (2014-04-12 20:08:28 CEST) built-in shell (ash)
Enter 'help' for a list of built-in commands.

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|__| W I R E L E S S F R E E D O M
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ATTITUDE ADJUSTMENT (12.09.2, r40431, V0.2)
With additional backports from BB
[www.friedzombie.com]
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* 1/4 oz Vodka Pour all ingredients into mixing
* 1/4 oz Gin tin with ice, strain into glass.
* 1/4 oz Amaretto
* 1/4 oz Triple sec
* 1/4 oz Peach schnapps
* 1/4 oz Sour mix
* 1 splash Cranberry juice
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root@(none):/# mount_root
/sbin/mount_root: line 1: pi_include: not found
/sbin/mount_root: line 1: pi_include: not found
/sbin/mount_root: line 1: set_jffs_mp: not found
/sbin/mount_root: line 1: determine_root_device: not found
/sbin/mount_root: line 1: can't create /.extroot.md5sum: Read-only file system
switching to jffs2
root@(none):/# passwd
Changing password for root
New password:
Retype password:
passwd: can't create '/etc/shadow+': No space left on device
passwd: can't update password file /etc/shadow
root@(none):/#