Hmmm...you sure your not looking at the minutes and not the mb limit?
If you choose to copy CD Audio, it'll be in minutes that bar, so it saying that it's more than the capacity of a 700mb disc is true since they can hold about 80 mins of music.
In terms of DVD, 300 mins might be about right, though you could copy these to MP3 format, by just selecting a Data disc. Though these would only play on a computer or DVD player that supports MP3 (Thats if the files are MP3)
But if you copy to DVD, this won't work in Cd players anyway, and only DVD platyers. So you'd probably have more of a chance making it an MP3 disc since you could fit about 300 normal quality songs and more on one cd-r disc
Hope this helps