You ran out of free space to create a contiguos partition to use the option "side by side"...
Here is the thing, you have your hard drive already partitioned, and "no space next to the windows partitions or anywhere else available", and I mean free space, without partition, merly free...
That is why it tells you the 2 things to do as you mentioned before..
You can doone of this things, you decide:
1. Erase the /dev/sda3 and /dev/sda4, reboot and then you will have entire free space to install next to the windows partitions. But you have too many space to just install BT5...although you can specify the size, lets say 40 gigs for bt5.
2. Install manually, no hassle, easy deal, just need to read a little. You pick the partition to install bt5 (sda3 or 4). But it is way too much space for bt5 in both empty partitions.
3. Do as instructed in step 1, but then create a "extended partition"of the size of the free space (128.8 + 439.9), highly recommended. Within the extended partition, you can create more logical partitions, as much as you want with the size you decide for each one, if interested in installing more linux distros (Ubuntu, Debian, LMDE, Fedora, etc).
Hope it helps..