If you get the following error message when trying to install or run a Windows application from a floppy disk, "Insufficient memory to run this application; close one or more applications to increase available memory and try again," the likely issue is a bad floppy disk or an incorrect CMOS setup.
Despite the error message indicating a memory issue, you should first run CHKDSK on the floppy disks to check for media errors. In addition, Microsoft documents that an incorrect CMOS setup for the floppy drive will also create an insufficient memory error in Microsoft Knowledge Base+ article #Q86248. For example, you might have a 1.44MB drive configured as 720K.
Other error messages that Microsoft links to an incorrect floppy drive configuration are:
"Cannot find file <drive>:<filename> (or one of its components). Check to ensure the path and filename are correct and that all required libraries are available."