No that is probably not right. The kernel source uncompressed is probably around 30MB. So there could be one of several things happening. One is that you created multiple sections on your hard drive and the /usr/src/ directory is not as big as you think it is. You can find out by using the "df" command. The second is that somehow the tar.gz is corrupting the system. Also up until about five minutes ago the new 04x series kernel source was not available. Which I just uploaded it and you can get it from the bottom of the page at <a href='http://freesco.sourceforge.net/' target='_blank'>http://freesco.sourceforge.net/</a>
I usually use "mc" and just hit enter on the file and then copy it to the other side window inside mc when dealing with tar archives. The new kernel source includes the entire directory structure, so it should be installed at the / "root" of the directory structure so it ends up as /usr/src/linux/