This is case 65341881.

This seems to be a regression in 1.4.2 recent releases.
This problem happens only on windows 2000, not even on windows xp.

C:\j2sdk1.4.2_13\bin>java -Xmx1400m -version
Error occurred during initialization of VM
Could not reserve enough space for  customer  heap

C:\j2sdk1.4.2_13\bin>java -Xmx1200m -version
java version "1.4.2_13"
Java(TM) 2 Runtime Environment, Standard Edition (build 1.4.
b06)
Java HotSpot(TM) Client VM (build 1.4.2_13-b06, mixed mode)

C:\j2sdk1.4.2_08\bin>java -Xmx1400m -version
java version "1.4.2_08"
Java(TM) 2 Runtime Environment, Standard Edition (build 1.4.
b03)
Java HotSpot(TM) Client VM (build 1.4.2_08-b03, mixed mode)

C:\j2sdk1.4.2_08\bin>java -Xmx1200m -version
java version "1.4.2_08"
Java(TM) 2 Runtime Environment, Standard Edition (build 1.4.
2_08-b03)
Java HotSpot(TM) Client VM (build 1.4.2_08-b03, mixed mode)

Yumin has a preliminary evaluation on this issue:

"I tested the binary based on this putback and the binary before this 
putback --- the result showed after CR 4515367, this problem occured. If 
customer filed escalation I could work again on the case to find more 
detail information. Now the only finding is the putback caused this 
change. 5.0 is not haveing this problem."
Posted Date : 2007-03-21 00:33:11.0

N/A

In bug fix of 4515367 (Exception error handling clean up), in VM_Version_init() stack, there is a call to strdup which duplicates a string in heap, somehow this action led to memory fragmented precedes universe_init() which has the biggest memory chunk allocation request. If change the initialization sequence make universe_init() precedes VM_Version_init(), see "Suggested Fix", the problem would go away.
Posted Date : 2007-04-05 16:34:43.0

I'm getting this sort of thing on 1.5 and 1.6.  And I've already installed the MS hot fix for 924054 on Windows Server 2003.