It usually means that Windows doesn't have enough 'hooks' left to 'hang' programs on, not that you've run out of physical memory.
If you haven't got heaps of programs open, or rebooting doesn't help get you going again, then it's probably an indication that there's lots of nasty 'internet intruders' on your system and you need to do scans for virus/trojan/spyware etc.
Sometimes programs which have been run don't properly 'let go' of memory, and lead to this error, but a reboot should fix those instances.