I'm experimenting with this on a different computer (P4 w/2GB RAM) and I'm getting the error shown here:
http://support.microsoft.com/kb/253912I've made all the recommended changes and it won't boot Windows. The splash screen starts and then the error message, and press any key to continue, then computer shuts off. It boots to command prompt and runs DOS with no obvious issues. This particular computer allows booting from a USB drive and that's what I'm using for this test. It allows to select from any USB mass storage devices it sees on power-up.
I've edited system.ini, looked through win.ini, config & autoexec. If I have success, I'll post results.