Can't Install Apps. System Folder Full?

Hey guys I've been having a problem. I am running chevy s 4.2 simply stunning froyo, but I now am unable to install any apps. I wanted.to update my Set cpu, but my phone says there is no room. When I checked my system folder with root explorer, I found I only have like 300kb left. I'm sure thats not a lot. I have tried sending some apps to sd and uninstalling some but nothing happened. Any help?

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