E_OUTOFMEMORY hResult with DirectX 10

Until now I had never seen this return code. My DirectX 10 program had been running perfectly fine on a Vista laptop, and the code used a REFERENCE device type for the Direct3D component.

Now, on my desktop, I have a DirectX 10 compatible video card, with Vista also installed now (sad to say, but necessary >_<).

The weird thing is, if I leave my code exactly the way it is, the very first hResult function call <<D3D10CreateDeviceAndSwapChain>> will always return E_OUTOFMEMORY. I highly doubt it is a VRAM problem (I have 1024 MB) and my system RAM is 3 GB, plenty of which is still available. Just by chance I switched the device type from REFERENCE to HARDWARE, and it works like a charm now. I tried to look up information about this but I am confused......it does not seem like memory should be a problem in that particular scenario. Is the hResult function call SUPPOSED to return that error code if I have a compatible hardware device? I just want to understand this so I can potentially avoid and/or understand future issues.

Why are you using reference in the first place?

I was using reference originally because my laptop, where the program originated, is incompatible with the hardware device.

That is a very rare thing. Every card, integrated or not, nowadays supports hardware acceleration. If it does, update the drivers.
Now, reference mode is not meant to be "play mode". It is more of a simulation mode.
So you are far better off using hardware mode, as you are supposed to be using.