Hi loko!
Another thought re: memory. What happens when you load just one row (10 images?) and stitch? It probably isn't a memory problem - at least for the stitching display part of the process - but this would be a way to check.
Also you should try setting the memory slider in "Preferences" to 40 - 50%. Your 2 GB of RAM is, I'm assuming, your total amount of physical RAM. Stitcher can address up to 2 GB of RAM and if you set Stitcher's memory to 100% it may try to grab it all (and you have to allow for System & other operations). Usually this is a factor when rendering - don't know if it applies to your situation - but you may want to experiment to see if this changes things.
On the Mac you can use the "Activity Monitor" (in the "Utilities" folder) to watch Stitcher's RAM use. Windows probably has a similar app.
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Nikon D70, 10.5mm DX Nikkor; PPC G5 2x2.5, 7GB; Mac OSX (10.4.11); Stitcher 5.6.2