Memory exhaused error in Redsn0w
This is a tricky error. A couple options to try, based on successful reports from this thread and this one:


Run redsn0w as administrator and in Windows XP (SP2) compatibility mode. Also try other compatibility modes, such as Vista SP1.
Move redsn0w to a place where it will have a short file location - something like C:/redsn0w/redsn0w.exe - and put the stock IPSW in that directory too.


It'd be interesting to see if those steps work. If they don't, another option is to simply use sn0wbreeze instead, which is available here: http://www.ih8sn0w.com/ - it supports building custom firmware for the same devices that redsn0w does.