I had this problem yesterday.
Try this in Terminal Emulator:
mv download download.bak
ln -s /mnt/sdcard/market-download-cache download
You must have root. And Terminal Emulator is an app from the Market, if you don't have it, try sideloading it by finding an .apk from the internet. I don't know of any other way, but there should be a better solution if you can't find it.
04/08/2010-20/08/2012, 22/08/2012-27/03/2013: Bell HTC Legend - HTC Sense 2.1 with Android 2.3
26/12/2011-20/08/2012: TELUS LG Optimus One - CM7.2
14/07/2012: Asus Nexus 7 from Google
- Stock Android 4.4 KitKat
20/08/2012-22/08/2012: Rogers Samsung Galaxy Note - Unrooted stock (worst phone ever, of all time)
27/03/2013: AT&T HTC One X(L)
- Stock Rooted Sense 5 Android 4.2.2
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