This problem is addressed in ArcGIS 8.1 Service Pack 1. See Related Information section to download this pack.Each time the Trace tool is used, a small amount of memory is not released. This is particulary noticable with densified curves. After using the trace Ttool many times in a single ArcMap session, the non-deallocated memory may cause ArcMap to run out of memory.
This is a known problem.
The current workaround is to close and restart ArcMap after using the Trace tool a number of times. This will release memory back to the system.
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