Virtual memory or swap file is where your PC uses some of your hard disk extra memory when your RAM (physical memory) is running low (too much running or very heavy loading app using up all your RAM).

You can tell when your PC is running low on RAM as you hard drive will start going bananas trashing away a lot, this is the PC "swapping out" or basically using the hard disk as memory. Virtual memroy will stop you PC from crashing but its very slow compared to real RAM - you your seeing this message a lot get some more RAM.

Under XP you can alter you virtual memory settings under the control panel but its best just to let windows manage it. Just get some more RAM