Netezza Error Record size 120000 exceeds internal limit of 65535 bytes
I suppose the data type of the result of the function SUBSTR(PARAM, ...) has the same length as the column PARAM itself. Since you have two of those in your select list, if the length of PARAM is large enough it's possible that the combined length of two values in the select list exceeds some sort of internal limit.

Try explicitly casting the values to shorter data types, e.g. 

SELECT 
  cast(
    substr(PARAM, (instr (PARAM , 'Name":"' )+7), (instr(PARAM, 'StepName":"'))-21)
  as varchar (100)) as Name, 
  cast(
    substring(PARAM, (instr (PARAM , 'StepName":"'))+14, (instr(PARAM, 'StepData":"'))-(instr(PARAM, 'StepName":"'))-17) 
  as varchar (100)) as StepName 
FROM Table