Comment 3 for bug 843404

I see from your question https://answers.launchpad.net/wubi/+question/170218 that you have 512MB RAM, however it's shared with the video card (up to 128MB) so this is probably the problem. See bug 820842 that talks about problems on systems with only 512MB ram.

Unfortunately Wubi requires the Ubiquity installer so there is not much you can do about this. The alternate installer requires less RAM but it is only for standalone installs.