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This problem is addressed in ArcGIS 8.1 Service Pack 1. See the Related Information section to download this pack.
After performing many network trace tasks in a single ArcMap session, ArcMap runs out of memory.
ArcMap fails to deallocate a small amount of memory after each trace task is performed. After solving hundreds of trace tasks in a single session, ArcMap runs out of memory.
Download and install Service Pack 1.