If you don't have 8gb (~7.7) free on HDD you can't install the install disc there anyway. You should probably stick w/ what you have already.
Rockstar says to only install the install disc (assuming 1). They don't recommend installing the "play disc" anywhere contrary to other outlets. if you free up room or get a new hdd try the following:
In the dashboard or home go to xbox system settings > storage > select the device > then GTA V > you should be able to see data/files listed out. Delete only the installed game (the 7.7 gb files) and not your save file (usually timestamped and in kb/mb). This should work. Recommend copying save data (last timestamp/closest) to the usb or cloud or both first, Again R* says not to do this currently and to only install the "install disc" and run "play disc" from tray. Proceed w/ caution but I'm gonna back up the play disc to usb in case (who knows what the hell that will do).
So when I got the game 4 days ago I installed it on a USB stick, I don't remember that it asked me to install Disc 2, simply followed the instructions and played.
Do you guys know how I can uninstall, re install the game so it's on HDD and USB (for less pop-ins) and keep or transfer my save games? I have the Xbox 360 S, it doesn't have 8GB free on its HDD...