The error is received due to a limitation in PIX version 6.3 which only recognizes the first 8 MBytes of Flash.
Because of this limitation, the upgrade cannot be performed while running software version 6.3. Instead, the upgrade has to be performed from Monitor mode.
In order to resolve this issue, upgrade the image from Monitor mode.
Refer to the Upgrading in Monitor Mode section of Guide for Cisco PIX 6.2 and 6.3 Users Upgrading to Cisco PIX Software Version 7.0 for the complete procedure on how to upgrade the PIX Firewall from Monitor mode.
In order to download the software, go to the PIX Software Download Center.