It is looking for virtual memory to load the textures onto before putting them into the RAM for when you view them. 

I will explain virtual memory.  It is an amount of your HD set for disk swapping.  It is like your RAM but is slower, it is used to load stuff into before, it is loaded into the RAM.  Like when you are flying around the alps and there are textures behind the mountains, instead of putting them into the RAM and filling them up hence causing massive slow downs, it loads them into the virtual memory and if you goto the area where those textures are needed it will load them into the memory for you to use.  In your case the flight loads up, this is the virtual memory being used, and for what you can see (like the grass etc) it loading that into the RAM as soon as you get into the flight.  However it is not for you because it can't get them into the virtual memory because of the lack of space.

The only solution is to get another hd and put that in your system as a slave to the other one, and put the virtual memory on there, also it may be best to put your games on there aswell, so that when you defrag it is easier and a lot more clean and quick.

I recommend having atleast 768MB of virtual memory.  With a low amount some programs don't run very well/at all/properly.  In your case it is not running properly.

I find one of the advantages in WinXP is the ability to set up your virtual memory to a custom amount very easily.  I have mine at 2.5Gb right now.  I have the space so it is not a problem for me.  Also with WinXP programs let go of the RAM, after using FS2k4 i check how much memory is free and i have 430MB free straight after using it, where as when i had Win98se i would have half that.  More physical RAM may improve your situation a bit, but it is the virtual memory that is holding you back.

Also (if you are confused):
Virtual memory=pagefile