DB2 - Not enough storage in the database heap error when trying to create database
On a 32-bit Windoes system each process, including the DB2 instance, is limited to 2 GB of memory space (3 GB at most, with the appropriate startup switch), regardless of the amount of physical memory available. Your instance configuration requests 4 GB (Size of instance shared memory (4KB) -&gt; AUTOMATIC(1000000)), which cannot be satisfied. 

Try changing the INSTANCE_MEMORY parameter to a smaller value, e.g. 50000 pages.

By the way, with DB2 10.1 you should be using automatic storage instead of specifying tablespace containers explicitly.