It does sound like you are running out of hard disk space (aka memory but not to be confused with physical memory - that which is used when programs etc. are running).
If Windows recommends you to clean up, it's to free up hard disk space rather than memory.
If it was memory, it would advise you that it needs to increase your Virtual Memory.
My guess is you have a lot of iTunes media filling it up.
One way to see what your biggest disk fillers are is to go into START > MY COMPUTER, and at the top right you will see a search box - just type the following in there and hit enter:
*.*
It will then look for every file on your hard disk (it might not include hidden files but these wont be big anyway).
Once it is finished, you can order stuff by clicking on the SIZE column.
What is / are the largest files you have?
Then click on the TYPE heading and order everything into file type - then see which group of files occur the most.
My guess is your iTunes is filling up your disk, and you need to think about moving it to an external hard disk, or re-locating it to another computer with a bigger disk if desired.