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Do you mean not enough disk space?
If yes, then goto Edit > Preferences > Performance and then tick a drive with more space. (you can also tick multiple drives)
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I don't know. See the image. Btw, my RAM is 2gb, free space on local disk C is 6gb, free space on local disk D is 7 gb.
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@Ec, I ticked both. Same result.
@Yves, cs5
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The error means that the image is over sized and cannot be used in Photoshop.
So the only thing can happen is resize it.
To resize it properly, click CTRL+T and then hold SHIFT to resize it properly.