Streaming 1080p MKV

Hi guys, so I’ve purchased and successfully installed atv flash black and am very happy with it. I’m in the process now of backing up my digital media, in this instance my blu ray collection. I have heard of people successfully streaming full hd from raw uncompressed/decrypted blu ray data, however I am receiving an error on my atv2 along the lines of: virtual memory too low.

I am hoping that the error is due to my router settings and not my iMac or atv2. Being a bit of a newbie to this, could anyone offer some advice on how to successfully perform this? Ultimately I hope to somewhat compress the raw blu ray data to one single MKV file with the highest definition possible. I have also heard that iOS 5 somehow is paving the way for full hd media. Can anyone please shed some light on this for me? I have already tried searching google but to no avail. I would greatly appreciate it!