Minecraft has crashed - ran out of memory

Initially the game crashed 2 times.
I have tried to create a minecraft.bat file with the following:
javaw -Xmx512m -Xms512m -jar minecraft.exe -> as found in one of the blogs, but then the program still runs out of memory.
I've attached 3 files. the first 2 are generated crash reports, the third one is copied and saved from the screen report.