I like all classes.. cept hateborne.. wait that's not a class...

+1 QFT!

As was explained: If you run out of physical RAM, Windows will use the swapfile as a sort of RAM surrogate. The swapfile itself is a huge file that usually sits on your C-drive and is called pagefile.sys.
This swapfile (or pagefile) can then act as RAM, but since read/write operations to a hard disk are much much slower than RAM access (RAM access is a few nanoseconds, while disk access is in the milliseconds) you want to avoid using it - however in this case it's not possible to avoid it since you only have 3GB of RAM (and if you use 32-bit Windows, you can't address more than 3-3.5 GB of RAM anyway due to address space addressing limitations - even if you have more physical RAM).
Windows usually manages the size of the swapfile itself, the default setting is to size it 1.5 times the amount of RAM you have. So if you have 3GB, the default swapfile size is 4.5GB. So much for theory.
In practice you have to look at how Windows writes to the disk. Think of the hard disk as one long strip of data, rolled up to form a circle. When you delete a file, there is a gap in the line. Say you delete a file of 50 kByte size. The empty strip is now 50kByte big. Now you want to save a 100kByte file. What Windows does is it writes 50kByte of the file into the empty space (the strip you deleted earlier) and 50kB into the next empty space (the "end" of the entire strip). This is called fragmentation and it slows down file access because the hard disk read head has to read 2 different physical locations to read a single file. That is why I suggested defragmenting your hard disk before changing swapfile size. That way you can ensure that the swapfile is not fragmented and you get optimum performance. Most experienced people put the swapfile into a separate partition for exactly that reason - but you don't have to.
Now... as I said, usually Windows manages the swapfile size on its own and usually that's perfectly fine. But it also allows you to manually set the size of said swapfile - effectively it allows you to create RAM from hard disk space (with the huge performance impact explained above). So if you size your swapfile to say 6GB, Windows can in theory use 9GB of memory (6GB swapfile + 3GB physical). But of course, the more you swap (i.e. the more data Windows has to write to disk due to insufficient physical memory), the slower your system gets.
If you have more than 1 hard disk, you can create a swap file on each of them - the size is then cumulative, but you can get a slight performance bonus (compared to having just 1 disk) because Windows might write to both swapfiles at the same time - not sure how big this bonus is in reality. Probably minor as disk writes are so slow compared to RAM access.
I hope this explains a little about what the swapfile is and how Windows uses real and virtual memory: Real memory is physical RAM, virtual memory is the size of your swapfile(s).
The C++ runtime error... unless it constantly happens just ignore it. Sh*t happens, especially with MS products. If it continually happens, download the "C++ Runtime Redistributable" for your Windows Version and re-install it.

Virtual memory has nothing to do with how much RAM you have, it's rather how much hard disk space you have left for your swapfile.
Check the virtual memory settings in Windows, choose the drive with most free space as your swapfile location (you can choose multiple drives). Are you manually setting your swapfile size or do you let windows manage the size? If you go manual, choose twice the amount of RAM you have as a rule of thumb.
Also it might be a good idea to defrag your hard disk before changing swap file settings as the swapfile ideally should be in "one piece" on the disk, not fragmented around.

[Update]

Update
I power-cycled my router (reboot didn't help) and it seems to work again now... maybe it works for others as well.

Update: Doesn't seem to be related to NIS after all. Uninstalled it and am now facing the same problem. Can log in but get kicked immediately.
Edit: Seems to be totally random now. I was playing happily in velks, then logged in second account and both went LD. Restarted with just 1 account, logged in and straight LD again.

Edit: Seems to be a problem with my Norton Internet Security. Disabled everything and I can now log in and don't get kicked out. Will investigate further later.

I get kicked out after a few seconds with all of my toons (regardless of location). Everyone in Nexus is naked, but when I managed to port to potimea, my equipment was back but I get kicked again. Can't currently play with any toon on any account.

Naggy doesn't always drop the tooth (used to drop 2 - 4/kill).

That's quite the understatement. He hardly ever drops the tooth now.. dozen kills got a million selo's drums but not a single tooth.

I'm sure that I screwed something up (somehow) but one of the slots is mixed up with another:
The ammo slot displays the first container in my inventory. And the last inventory slot is empty (can't place anything in it) - see attached screenshot.
Is there an easy way of fixing this? It's not really disturbing in terms of gameplay, it just bugs the hell out of me when I see it