FCP 7.0.3 OUT OF MEMORY?!!

I bought a 12 core mac pro, 16gb ram and when I try to put an HD video clip into my viewer, I immediately get a pop up saying, 'General Error,' followed by 'Out of Memory.' The info on the video clips are as follows: 1920x1080 H.264 Compressor, 23.98
Does anyone know why I'm having this problem?
My OS is Lion, 2.66 processor, 4 bays w/2tb drives, Shouldn't I be able to easily process this video?

In FCP7, you can not edit H.264 video directly. Or rather you can try, but it will be a fairly painful experience. You should convert your source footage to an editable format such as ProRes prior to use in FCP. This is because H.264 is a heavily compressed Long-GOP codec.
MtD

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