The term memory is most commonly associated with RAM whereas disk space is
referred to as storage.  Despite the subject of this thread your problem
appears not to be with memory but rather one of considerably varying free disk
space.

I have no idea what is happening here and you mention one possibility - your
virtual memory cache.  This is quite easily checked since all you need do here
is check the size of the file win386.swp to find out how much disk space is
being used as virtual memory.  I would advise that you continue to allow
windows to manage your virtual memory as I don't think this is the cause of
your problems.

Another possibility is the space being used for the system restore archive.
This is the _RESTORE folder on the partition containing your windows folder
and you can control the space allocated as follows:
System | Performance | File System | Hard Disk and adjust the restore slider
to your preferred setting.  A  figure of 200MB is normally more than adequate
for day to day use allowing perhaps a week of checkpoints to be available
although increasing this to perhaps 400MB for a few days during periods of
large installs such Microsoft Office is advisable.

Another possibility, depending on how your PC is configured, is that your
machine goes into hibernation and creates a temporary file to save the
contents of RAM whilst hibernating.

Next time you see that your space has rapidly diminished try to determine
where it is being used.  You can do this with Explorer.  Look for large files
that have only recently been created or amended, and to do so it would
probably be best to allow the viewing of all files in Explorer by going into
Tools | Options | View and checking "Show hidden files and folders" and
UNcheck "Hide protected operating system files".

Please post back once you have established the files and/or folder that are
using your storage and if you need help in preventing this from happening.