The key in solving the issue was the version of Loadrunner. It turned out that Loadrunner 11.52 demands to have 3GB user addressable memory (i.e. you must have the /3GB parameter set in the boot.ini file of the OS) which is not the case with LR 11.04(it works with only 2GB addressable memory) and so the aforementioned system variable has nothing to do with the problem.
Cheers.