FIXED!
See Microsoft Knowledge Base:
http://support.microsoft.com/support/kb/articles/Q259/1/51.ASP
CAUSE
The default permission is Everyone with Full Control. This may have been removed to provide additional security, and individual accounts such as Administrator may have been added. The Everyone group that was removed also includes the System account; removing the Everyone group without adding the System account as an individual account renders the paging file unusable.
Or, a paging file that is not adequately sized causes problems and generates an error message.
RESOLUTION
To resolve this issue, give the System account Full Control permission on the root drive that contains the paging file. Then, verify that the Administrator account has permission to see and modify the paging file. Finally, establish the paging file with the recommended size for use by the System account:
Click Start, point to Programs, point to Accessories, and then click Windows Explorer.
Expand My Computer in the left pane by clicking the plus sign (+), and then click the drive with the paging file. Typically, this is the system drive unless you specified otherwise during Windows 2000 Setup.
NOTE: The paging file (the Pagefile.sys file) is a hidden operating system file. To view these files, click Folder Options on the Tools menu, click the View tab, click to clear the Hide protected operating system files (Recommended) check box, click Yes when you are prompted to verify the change, and then click OK. You may want to reselect this check box when you are done with this procedure for file protection purposes.
On the File menu, click Properties. Click the Security tab to view the current permissions.
Click Add, click System, and then click Add.
Click OK.
Click to select the Full Control check box, which will fill in the other boxes. Click OK.
Click Start, point to Settings, click Control Panel, and then double-click System.
On the Advanced tab, click Performance Options. In the Virtual Memory section, note the Total paging file size for all drives value, and then click Change.
Click the drive that contains the paging file. This drive now has the System and Administrator accounts set to Full Control permissions, allowing this change to be made. Type the size of the paging file in the Initial Size and Maximum Size boxes. Typically, use physical RAM + 12 MB for the initial size and physical RAM + half of physical RAM for the maximum size. Click Set. On the bottom of the screen, make sure that the Maximum Registry Size value is at least two times the size of the current registry size.
Click OK. Close any running programs, and then restart the computer.