It sounds to me like your computer is just running out of RAM while compositing the panorama. Are you using the 32bit or the 64bit version of ICE? (I ask because 64bit programs can use much more RAM, provided that you actually have more than 4GB of RAM installed, but you will need to be running a 64bit version of Windows to use the 64bit version of ICE.)
Just to make sure that I understand, at what point does this message occur? Does it happen:
1) before ICE can create a thumbnail preview within the main ICE window,
2) if you try to export the panorama to your hard drive as a JPG, TIFF, or other image format, or
3) only when you try to convert it to Photosynth's cube map format?