Power Civil: LIDAR thinning

This is a continuation of an earlier post wherein I described problems with converting a large LIDAR dataset to DTM in Power Civil. I have the points file clipped to the area of interest and have sucessfully built a DTM. Now I want to thin the data to improve performance. The clipped data file contains almost 5 million points and is about 166 MB in size. When I run the Filter XYZ tool in LIDAR tools I get a memory allocation error. I have tried both the TILE and TIN filter options and have used the recommended settings in the help system.

I have 2 GB of memory on my Dual Core 1.6 GHZ XEON machine. Any suggestions on alternatives or troubleshooting techniques?

Power Civil XM ver. 08.09.06.30