can't create new windows

Folks,

So here is the issue. When I open "too many" programs under Windows, I stop being able to run new programs. Or they will open, and some of the subwindows will fail to create (most often the menubar.)  For example, this most often happens with ie. http://mywebspace.wisc.edu/elhathaw/web/windows%20screwup%2000.jpg

With firefox, various windows will fail to create; most often the main window. http://mywebspace.wisc.edu/elhathaw/web/windows%20screwup%2002.jpg This is with 10 copies of ie, a couple other apps, and 6 firefox windows open. I loaded anandtech but nothing displays because the main window failed to create. I also clicked on file in the menubar but the menu doesn't appear. See that the main window is grey instead of white as it ought to be.

Other programs, such as mspaint, will simply not open and sound the generic "system beep." I also lose the ability to display, or to display submenus, on the start menu. Or to see the alt-tab dialog box.

I have no idea what is wrong. I've checked the event viewer and nothing shows up. The laptop has plenty of free memory and free disk space. I've run adaware and not found anything, and the issue happens with programs besides ie. This happened under SP1 and happens under SP2. Also, this behaviour is unaffected by how long the computer has been up; I can open enough programs and trigger this right after rebooting if I wish.   I've updated the video card drivers to the most recent release from dell (dated 6/10/2004); I even tried disabling video acceleration and the only thing that happens is video playback unwatcheable ;)

This occurs with ~20,000 handles, 600 threads and 70 processes; there is >200MB of free physical memory and a commit charge of 440/1250. IOW, the system is not being pushed.

Laptop:
Dell 600m running WinXP Home SP2, installed by Dell
512MB RAM
768 MB swap file
10GB free disk space
1 user

Thanks for any ideas.

earl