During a recent VMware ESXi 4.0 deployment I experienced an error while installing:
“VMware fatal out of memory reading”
This occurred around ~4 minutes into the installation process whilst image.tgz was being loaded.
The server in question was a Dell PowerEdge 860, 2 x 500 GB RAID 1 and 2 GB of DDR2 memory. I went ahead and increased the RAM to 4 GB and started a re-install, same problem. I identified that the server was running BIOS version A03. I proceeded in a BIOS upgrade to A05 and RAID controller firmware then initiated a re-install. ESXi installed successfully.
It appears the problems pertain the memory handling and the VMware hypervisor installation process. Bottom line, upgrade your BIOS and RAID controller firmware before doing an ESXi install. Its also a good idea to check out the VMware Hardware Compatibility List (HCL) located here.