From you log it looks like you are close to the 2Gb limit for a single process on 32-bit OS. The message advice is erroneus since increasing your swap space will have no effect if the memory limit is reached. You have two options:
1) Re-run the analysis on a 64-bit machine. 64-bit support for Pro/Engineer and Mechanica is available. You have to request the correct disks to install on a Windows64 machine. 64 bit UNIX is also supported. This will give you at least 8Gb of memory. Up to 4-way processing is also supported on Windows (and up to 8-way on SGI I believe).
2) Review the model and reduce the number of elements and links, or only run a 'quick-check' analysis if it has already completed the first pass and check the stress error estimate to see if it is acceptable. It usually is if you have a large number of elements.
Regards,
Rod