Follow up info:
After translation to Lazarus 2.0 fixes and FPC 3.2 fixes (32bit on Win10x64), and after installing tons of components I have again faced "No memory left" error. This time I hit a hard limit. It happened with normal non optimized build mode, and my Lazarus executable came to an extreme size of 790MB. I was forced to do it like that because my favorite optimized settings "-O3 -g- -Xs -CpPENTIUMM -CfSSE3" after a while bring me to incompatible PPU issues with already installed components (clean all does not help). So, now I could not continue installing packages for one or the other reason. Being desperate, I started playing again with optimization switches. Finally, everything works again and I could continue installing packages without issues and bringing Lazarus executable size down to 64MB, so I want to share this in case anyone else bumps into the same problem.
These are optimized IDE options that work:
-O2 -g- -Xs -CpPENTIUMM -CfSSE3