ConfigMgr 2007: Distribute Software returns "not enough server storage is available to process this command"
"not enough server storage is available to process this command"
when you google you will find several refrences to an IRP stack size issue in windows NT4. This is not related.
The issue you are running into is covered in this blog post
http://blogs.technet.com/smsandmom/archive/2008/03/10/configmgr-2007-distribute-software-updates-wizard-returns-not-enough-server-storage-is-available-to-process-this-command.aspx
Test: Open up the Computer Managment (compmgmt.msc) >> Shared Folder >> Sessions
If you see your ConfigMgr / SCCM service account listed a bunch of times and idle. Then the blog post above will fix your issue.