I get "Not enough storage is available to process this command" whenever I install a driver

If I try to install any driver(I tried Vmware, Virtualbox and my webcam driver) I get the error

Not enough storage is available to process this command

I tried increasing the IRPStackize as specified here, however that KB is about transferring files from a server to client and this is about drivers.

The error message from Event Log, I have 20 GB of free space on my C: drive

Fault bucket , type 0
Event Name: PnPDriverInstallError
Response: Not available
Cab Id: 0

Problem signature:
P1: x86
P2: 00000008
P3: vmci.inf
P4: 4af0eded3adeeb65b553b084abbaf45d0c5cd514
P5: vmci.install
P6: 
P7: 
P8: 
P9: 
P10: 

Attached files:

These files may be available here:
C:\Users\Gowtham\AppData\Local\Microsoft\Windows\WER\ReportQueue\NonCritical_x86_b8ae86859f991067eed5448ac3c07952d21e583_0a6d56f5

Analysis symbol: 
Rechecking for solution: 0
Report Id: 74c97360-ad5c-11e2-bf8d-bcaec599c7f1
Report Status: 4

Looking at the driver install log, I found this

>>>  [DIF_INSTALLDEVICEFILES - ROOT\*6TO4MP\0000]
>>>  Section start 2013/04/25 13:31:37.843
      cmd: C:\windows\system32\svchost.exe -k netsvcs
!!!  dvi: Unable to open file queue
!!!  dvi: Failed copying driver files (00000008)
!!!  dvi: Error 8: Not enough storage is available to process this command.
!!!  dvi: Default installer: failed!
!!!  dvi: Error 8: Not enough storage is available to process this command.
<<<  Section end 2013/04/25 13:31:37.845
<<<  [Exit status: FAILURE(0x00000008)]

Your Windows installation seems to be in a particularly bad shape.

If this problem is not too old and you have a system restore point from before that, I suggest that you try to go back to a time that Windows was more stable.

Otherwise, boot in Safe mode and see if the problem is still there. If not, then some installed product is causing the problem and you need to find out which.

If this is also happening in Safe mode, then something is seriously wrong with Windows.

The next step is to try sfc /scannow and let us know what the result is.

The last stop before reinstalling Windows is Repair Install, that should fix Windows while preserving user accounts, data, programs, and system drivers.