Windows XP Service Pack 2
Darcs 1.0.9 (binaries from http://zooko.com/darcs/darcsdir-w32-1.0.9.zip 
and manually built from sources with GHC 6.6 and 6.6.1), 1.1.0pre1 
(built by GHC 6.6.1)

When using command "darcs diff --from-tag=v1.1" or "darcs diff --last=8" 
after listing recorded patches which will be in diff darcs says "darcs 
failed: resource exhausted". Smaller number in argument --last allows to 
create diff, also is possible to create diff with commands above under 
FreeBSD 6.2 (witth darcs built by GHC 6.6.1 via FreeBSD ports system).
Command line switches to control Haskell runtime system suggested in 
Internet doesn't helps.

Alexey,

Thanks for the report. How much memory was available when you tried this test? 

Did you try this?
darcs +RTS -M512M -RTS  diff ...

Was there an additional message besides "resource exhausted", such as either
"out of memory", or "too many open files" ? 

While "darcs diff" runs, can you monitor the memory using another tool and see
if the memory is running out? 

     Mark

I spent a lot of time to reproduce this problem on repository which I 
use to report it. But now I can't repeat it now even on 256 MBytes RAM 
machine.

Following information about first detection of the problem.
This problem has been detected on Windows XP Service Pack 2 with 512 
MBytes RAM. I tried +RTS options but I insert it at tail of command line 
after all other options for darcs. -M512M doesn't help me and I solved 
problem by pulling repository to FreeBSD and generate diff on it. No 
additional messages has been reported with "resource exhausted", only 
"darcs failed: resource exhausted".

I spent a lot of time to reproduce this problem on repository which I 
use to report it. But now I can't repeat it now even on 256 MBytes RAM 
machine.

Following information about first detection of the problem.
This problem has been detected on Windows XP Service Pack 2 with 512 
MBytes RAM. I tried +RTS options but I insert it at tail of command line 
after all other options for darcs. -M512M doesn't help me and I solved 
problem by pulling repository to FreeBSD and generate diff on it. No 
additional messages has been reported with "resource exhausted", only 
"darcs failed: resource exhausted".

Alexey,

I appreciate you spending so much time to try to reproduce this for us. 

For now I'm going to mark the bug as "need example". It seems difficult to
troubleshoot further until that happens. 

Perhaps in the future if another user runs into the same bug, they'll find this
ticket and can add their example to it. 

Thanks again for helping the darcs project with your report and troubleshooting!

   Mark

Since the reporter can no longer reproduce this issue either, and the has been
no further follow-up for over a month, I've updating the status of this to be
"wont-fix" / presumed-dead. 

It can always be re-opened if the bug is spotted again.