The Win 16 subsystem resources message was caused by a poorly behaved 32 bit app that was running up to the maximum allowable gdi resources. In the registry, there are a few keys whose names end in handlequota, and which default to 10000.
Changing the gdi quota one to 3000 made the problems I'd been having with resources go away.
A couple of other people who've had the same problem ought to look in task manager for ill behaved applications. If they find massive numbers of gdi objects or user objects in use by one or more applications, they then know the cause of their problem.
