Oh for gods sake dont tell its due to RAM or Firmware issue Or due to VIRUS.
The error message was "Phone Memory Full".and not "Memory Full Close some applications" another problem which is due to Low RAM
This issue has been discussed here in this community lots of times, i guess few have been deleted.
Here are the reason for that .
1)Cache Folder
2)Lifeblog Database
3)Bluetooth received messages stored in inbox
4)FOTA file(reserved.bin)
5)Default Application installed in Phone Memory.
1)you can delete the cache folder content in path C:\Cache.
2)whenever you receive songs/photos/videos this lifeblog.db collects all datas and eats up phone memory.
just delete lifeblog.db in path C:\DATA\lifeblog\Database\Lifeblog.db
3)you can change message storage memory as "Memory card"
so that files received through bluetooth is stored in memory card directly.
select messaging--->select options--->select settings--->select other--->select memory in use and change it to "Memory card".
4. you can delete FOTA files (which occupies 5MB of phone memory).
c:\PRIVATE\102072c4\reserved.bin
which is used for FOTA and not used as of now.
This file eventually comes back whenever you format the phone or check for firmware upgrade throuch Device Manager in Tools.
5)Applications like "Settings wizard" and "Search" is installed in phone memory which occupies 3MB approx, you can uninstall both application and install it in memory card.
If you do all the above procedure you can get upto 42MB of free phone memory.
If you feel the above procedures are too long just format the phone memory using code *#7370#.
Hope no one creates a topic on this issue again.