Notice that the space in between the molecules is approximately the same or has the same volume as the molecules themselves. Now, the volume can no longer be neglected. So we can say the volume is zero because now the molecules actually take up a lot of space much more than in this picture. And that means the second assumption in our kinetic theory also breaks down. Namely, volume is no longer zero. So we see that in extreme conditions of high pressure our ideal gas law no longer holds.