I have been getting this error too (alot) , with or without the seperate proccess checked ,
and the task manager shows P8 is using 500mbs to 1gb  out of my 4gb ?
sometimes you get to save your work (as the message suggests) sometimes it just crashes to desktop :(
I have it also say it cant load a texture because its run out of memory and in that case it was only using 500mbs out of 4gb ??
Also P8 uses 40% of CPU all the time no matter how long you leave it sitting doing nothing :(

Dynamic clothing is faster :)  but rerunning a simulation sometimes removes body morphs

I hope this is addressed in the 1st SR :)

My system is Dual core P4 3ghz , with 4gig ram , win XP pro , ATI HD 4850 512mbs