I'm currently using Win98se, and have a friend who wants to send me some files, but he has 2003 server on his system. Can files be transfered from his system to mine?. I'm clueless on this, but have a hunch that it can't be done.
Have you checked how much virtual memory you have? I had a similar problem once and was advised to decrease/increase VM and it worked. (you may have to tinker a bit with it though)