When you are thousands of miles away from home, and Microsoft Office 2007 "Ultimate Edition" starts to tell you that "There is not enough memory or disk space to run Word" and "There is not enough memory or disk space to run Outlook", things can be a little hectic.
The root of this problem is in Microsoft Office Word. Outlook uses Word to edit and view emails, so Outlook would yield the same error. I searched on Google for answers. Most referred to older versions of Office. Some suggested that one should remove "Normal.dot", other suggested that one should clear the "STARTUP" folder, or delete the "Data" registry key, or delete the "Options" registry key. Some of the suggestions even came from Microsoft.com. By the way, Word 2007 does not have a "safe" command line switch.
I tried them. I ran Windows "System Restore" to various dates. None helped.
It turned out that the solution is simple: From Windows 7's Control Panel, go to Program and Features, selection Office 2007, and click on "Change". One of the two options in the popped up dialog box is "Repair".
So I ran "Repair".
That fixed my problem. I wonder why Microsoft' own knowledge base webpage for this exact problem did not memtion this fix.