Watch the virtual memory, not mem usage. I ran into this problem exp with xml transforms from temp swap. You can watch this via windows 2000 task manager under View - Select columns. I was using 1.7 gig of Vm and getting this error.

Added the /3GB /PAE /NOLOWMEM to the boot.ini and going to add another 4GB of memory to the machine.

Over all I am running 3 instances on this machine with oracle.exe stack at 1Meg, I've seen suggestions that you can run orastack and lower the memory requirements for the exe, agent and lsnr.

Also insuring all the code closes the result sets and free the number of cursors.

I rather despise ORA 4030 and 600 errors esp the mnemonics!
like (koh dur heap d,kghsseg: kolaslCreateCtx) wtf.