Issue with turning on project 2010 / 2013 - "There is not enough memory to complete the operation. To free up available memory, close programs, projects, or windows you aren't using, and then try again."

I get the following error after the installation and configuration window of MS Project: "There is not enough memory to complete the operation. To free up available memory, close programs, projects, or windows you aren't using, and then try again."
It happens both with MS Project 2010 and 2013 on a Windows 7 desktop. 
I tried installing / uninstalling Office 2010, MS Project, tried installing 32 and then 64 bit versions, clean up, disk error checker, startup changes (msconfig), anti virus, running as Windows 7 and then Windows XP compatible mode. 
Nothing helps. I see this issue reported as early as 2007 version of MS projects on Microsoft forums, but I do not see any solution anywhere. Any suggestions on how to fix the issue without having to reformat hard drive? Every other application, including
all other Office programs work seamlessly. 
I also tried Microsoft support, after an hour and a half of basically doing what I did before, I was told I have to pay 99$ for "premium" support, so someone can look at this bug. 
I have 16 Gb RAM and more than 200Gb or hard drive free, so actual memory is not the problem. 

This issue was originally reported with MS Project 2007 and keeps popping up since.
A quick Google search provides more than 200K pages of results of this issue:
https://www.google.ca/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=There+is+not+enough+memory+to+complete+the+operation.+To+free+up+available+memory%2C+close+programs%2C+projects%2C+or+windows+you+aren't+using%2C+and+then+try+again.
And 193K results on Bing:
http://www.bing.com/search?q=There+is+not+enough+memory+to+complete+the+operation.+To+free+up+available+memory%2C+close+programs%2C+projects%2C+or+windows+you+aren%27t+using%2C+and+then+try+again.&go=Submit&qs=n&form=QBLH&pq=there+is+not+enough+memory+to+complete+the+operation.+to+free+up+available+memory%2C+close+programs%2C+projects%2C+or+windows+you+aren%27t+using%2C+and+then+try+again.&sc=0-0&sp=-1&sk=&cvid=4cb023c1fbd94ec2bba9821b095f21f2
Computer was defragged already. I run more tests, and specifically when MS Projects tries to run, it tries to take all memory, more than 300Gb, on the computer. (DropBox was running at the same time, and warned that there were no space. As soon as MS Project
stopped attempting to configure itself, everything came back to normal and the available space became available again.)
Looking through older forum posts, looks like this application tries to take "unlimited" amount of memory. Some registry fixes are mentioned potentially, but I was not able to apply them. 
Since everything else works, this is a MS Project bug reported by multiple users on various versions of Windows, including Vista and 7, so please provide a fix and not 'not a know bug' lie. All the premium support will say, is to format the hard drive, unless
they have a patch or a registry edit solution. If the latter is true, since the issue exists for multiple years, it should have been already been provided to users.
Also, I am not running a SQL server, or any server, this is an installation on a local machine. 

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