FWIW, I was re-encoding some MPEG's to author a DVD-Video and had that "reallocation failed" warning when I used Nero Burning ROM to actually do the burning. For me the solution was to free up some space where Nero Recode was storing it's temp files and the final VIDEO_TS folder. I think I had like 7GB free, but then free'd about 9GB just to be on the safe side. After that, things "reallocated" fine.