1. "...So I'm guessing you're in a situation like that."
Yes,you are right.
2. "- Somehow change what temp directory Arc uses."
I don't know how to.
3. "- Somehow change your partitions so the home directory and temp directory are in the same one."
This worked.
BTW, I have tried the old arc3.1 version, but it didn't have the problem.
$ TMPDIR=~/tmp arc.sh
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