I have had this happen once before when building a (whoa nelly) 1000x1000 level.
(I didnt get too far  )
The size of level you can run depends on, as it has been said already, your RAM.
One of my friends tried to play a rather big level on his old 133 and it came up with that error. I then tried the same level on my 350 and it worked fine. (I stuck in the proc. speed to show the age of the PC and I also thing the speed has a minor factor too)
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