|I would guess the problem may be the you only have 503MB of memory. If you are scanning in color the files can get quite large. If your virtual memory is also low due to an almost full hard drive there is no where for the scanner to store the file.|
Post the total and free space on the Windows partition of your hard drive.
Did this same scanner previously work OK on this same WinXP installation?
The issue could also be scanner drivers. Did you install the scanner using the CD that came with it. The normal method is to install the software and drivers and at some point you will be prompted to connect the USB cable and power to the scanner. Is that how you install it?