You may try the following:
- Shrink SQL transaction log files using DBCC SHRINKFILE (see this KB)
- Shrink SQL data files using DBCC SHRINKFILE or DBCC SHRINKDATABASE
- Destroy unneeded files (specify the /startcleanup flag)
If you decide that you will need new hardware, you can use the TFS to TFS migration tool to migrate to new server.