It's a issue in Visual Studio using too much virtual memory. The options in decreasing order of excitement are:
3, Have Microsoft specifically fix this problem in their 32 bits toolset (Usually only happens in version+1)
4. Split the static libraries into dlls so the linker can cope with it.
Currently, only #4 works:
set GYP_DEFINES=%GYP_DEFINES% component=shared_library
python build/gyp_chromium
and rebuild.
Also, you should use ninja, it's much faster.
M-A