From the README file

TROUBLESHOOTING


On a Windows 95/98 machine you may see an "Out of Environment Space"
error message when starting the server. This is caused by Windows
providing too small a space for environment variables. To work around
this limitation:

    Close the DOS window (the error can corrupt its CLASSPATH variable)
    Open a new MS-DOS window
    Click on the MS-DOS icon at the top-left of the Window
    Select teh Properties option
    Click on the "Memory" tab
    Adjust the "Initial Environment" drop-down box from "Auto" to "2816"
    Click on OK
    Start the server