Memory/Optimization question

I have never had any issues with Memory until I recently installed Steam/Fallen Enchantress in Windows XP (which also installed DirectX 9.0c (I am not sure what version was there previously).

The issue: if I play this game, in a short time my Mini goes to 100% Memory usage, and becomes almost unresponsive. I have 8GB of memory on my machine, and 2GB allocated to Windows XP. If I start up the Mac, start Windows, and Start steam, I have a lot of Free Memory (green in activity monitor). Within about 10 minutes it is 4GB Wired, 2GB Active 2GB Inactive. If I reboot Windows XP, all the memory frees up. If I run one of these "free memory" utilities (which I think tries to allocate lots of memory to get unused memory to free up) the computer will show more free memory (after a longer time than it takes to restart XP) but it quickly fills up again and Mac remains "slow".

I have tried changing Settings (Faster Mac - which seems to cause the mac part not to freeze up as much when Parallels gobbles up all the memory, Disable Adaptive Hypervisor - which does nothing for this issue).

I submitted a ticket during a low memory occurrence, but I looked through the logs, and I saw nothing helpful (22940403).

Anyone have some suggestions re: a way to remedy this?

Details:

MacMini Mid2011
OSX 10.8.2
8 GB Memory
Parallels 8
-Windows XP SP3
-DirectX 9.0c
-2GB memory allocated to Windows, 256K Video memory, 3D acceleration on, enable vertical synchronization
-Steam - Fallen Enchantress (up to date)