You do NOT have to have any particular storage size on the ipad for say....Just nough to hold trhe app itself which even the smallest 16GB model will more then do. You can have tons of apps on the thing and never really fill it up as music, videos and movies are the real culprit for space usage.
As far as the error message goes; that's a new one to me. I'd suggest calling slingbox since your still in the free 90 day support period for assistance.
Hi trip2win - if you just purchased SlingPlayer Mobile for iPad, you have 90 days of complimentary support! This error seems really unusual, so I'd suggest giving us a call, so we can help you sort it out..
The Sling Support Team