When an image is loaded into memory, it may consume far more RAM than the file consumes on disk. "For example, a file at 4 Kb on disk but consumed 20 Kb RAM when opened". Thus, the important thing is not how large the file is, but how much memory it consumes when opened by an application.
The Project Client can address up to 2 Gb of memory, and the memory must be contiguous. As you open more applications in Windows, the number of available memory drops and the available memory becomes increasingly fragmented, thus making "out of memory" errors more likely to occur.
Memory issues in the Project Client are difficult to troubleshoot. It depends a great deal on what else is happening on the workstation. We often advise users who are dealing with large single images or large batches of images or PDFs to dedicate a machine to the Project Client and close other applications. This frees up as many resources as possible for the Project Client. The Project Client also relies to some extent on contiguous blocks of RAM, so even when a machine has tons of RAM, if other applications are running they can chop up the available RAM into smaller pieces.
Sometimes malformed tab-delimited files (ie. files with training spaces or a bad format) can appear like this error. If you are uploading multiple files and find that larger files go through while smaller files fail, check for issues with the tab-delimited file that goes with your compound object to make sure it doesn't have any extra formatting or blank spaces in trailing fields.
Please contact OCLC Support if you need further assistance.
If possible provide the file to support to diagnose.
Provide Site ID and Collection of where you are attempting to add item.