I haven't tried it either, but I'm quite certain it won't work using a CDRW.
CDRW's aren't like hard drives. Some software can make them "appear" to work that way, but in reality, they are fundamentally different than real hard drives.Look, you've got to have a "clean" set of DRS files for MPS to make mods, which require approx 175 MB (I'm quoting from memory so this number may not be 100% accurate). There's really no way around it. MPS was specifically, written so that it would not corrupt your original AOK files. Now once these files are backed up, your mod projects really only take up as much space as the individual resources you edit, so the space requirements are really up to you. The AKS/AKX formats were designed so that you could distribute only the actual modifications made by your mod.