the error means the server is not allowing enough memory to be used for resizing the image.
try adding the following code to line 1 of the webassist/file_manipulation/helperphp.php file:
Your friends over here at WebAssist! These Dreamweaver extensions will assist you in building unlimited, custom websites.
These out-of-the-box solutions provide you proven, tested applications that can be up and running now. Build a store, a gallery, or a web-based email solution.