Mel:
I am not a computer expert. I am sure there are members who know a lot more than I do and I hope they will pitch in to help you solve your problem.
Regarding Memory: Choose Edit>Preferences>Memory and Image Cache. I dont know your RAM size. My inclination would be to set this preference to use as much memory as your system will let you. I use 75% but have not tried to push this setting to the limit. If you think PSE is using too much memory, you could back off this setting; but my guess is that an increase would be better than a decrease.
If you have taken a lot of steps, then Edit>Clear>Undo History will dump your History states and free up memory. Yes, you lose them but if you are not going back to a prior step you will not miss the history dump.
If RAM is at a premium, you might want to try a program called End It All. It closes all nonessential programs that run in the background and I use it when the instructions for loading new software suggest closing all open programs, and when I run a system backup or disk defrag. I dont know if it will help your problem but you can find it at
this site.
Regarding Disk Space: File>Clear Cache frees up the disk space that PSE uses for thumbnails and file information. You can also set your cache levels in the preferences menu.
An external disk may be a good solution if you have other uses than make it worth the expense. Choose Edit>Preferences>Plug Ins and Scratch Disks which let you point PSE to where you want virtual memory. In PSCS the instructions recommend a scratch disk other than your C: hard drive to improve performance.
Again, I am not a computer expert and can only give you my opinion as to how I would troubleshoot the probem. I do hope it helps.
---Bob
PS I just found
this post which sounds like your problem.