Had a client receiving the above error while trying to email statements. The client had moved servers so it was working on the old server but the new server kept on saying Insufficient Memory. I finally opened up a case with Microsoft and somehow sneakily passed the issue off to a fellow consultant to follow up with. I actually thought MBS would know how to resolve the issue and I was leaving for the day and I wanted the issue resolved quickly. That was eighteen days ago and forty emails by the client, MBS support engineer, and the consultant I passed this off to (as well as several phone calls related to this case). Yes, I counted as I was curious.
I did some research on my end and noticed that the email functionality does not work as expected on a 64 bit install. Please install a 32 bit version of outlook and try to send the emails.
After installing the 32 bit version of Outlook the functionality worked as expected.
I'm not sure what the consultant I passed this off to thinks of me at the moment. He was a good sport and copied me on all the emails he sent back and forth to everyone. I'm pretty sure that was an attempt to make me feel guilty he was doing all the work on this case. I suppose I do feel guilty a bit. At least enough to blog about it.