Same probelm just got this today. The images from Illustrator 10 and then photoshopped to jpeg files...the jpeg isnt working, says out of memory and my system is pretty powerful. Tested a regular photgraph jpeg and it doenst casue the problem

This info may help us help you. Just pick one of the problem images and give us this info.

What is the file size of the image?

What are the image's width and height?

Was the jpg saved correclty as RGB, or was it saved as CMYK instead?

EDIT: Never mind, don't answer here. I see you've started a new thread for this.