The error message is thrown because of the COM/ActiveX layer that is started by XLSREAD. In particular, Excel is not able to allocate enough memory when it attempts to copy large amounts of data for transfer into MATLAB, and MATLAB is re-throwing the error in the Command Window.
Please perform the following steps in order to eliminate the error:
1) This error may occur if a file with macros is saved in Excel 2003 and then used with Excel 2007 or Excel 2010. The issue may be resolved by first opening the file with Excel 2007 or 2010 and re-saving.
2) Place the Excel file in the local directory. If the file is on a shared network, it could be open in a program or in use by users. A possible workaround would be to change the location of the Excel workbook to a local directory from a mapped network drive.
3) Run the Disk Cleanup by navigating to Start, type "Disk Cleanup" and remove only the "Temporary files" by checking only that option.