Opening PSD File - Not Enough Memory

I created a sequence of images from Particle Illusion in a PSD format. When I open one of the images in Photoshop (CS3), it opens - no problem. When I try to open it in Illustrator CS3, I get the message "Not enough memory to place the file".

On Windows XP 64, opening PSD files with Illustrator CS3 does not seem to work.
What you can do to resolve this issue is to save the file as PNG in Photoshop. That can be opened in Illustrator and transprency is preserved.
  www.revis3d.com

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