The error you're receiving is because EMM386 was unable to find 64K of contiguous space needed for the expanded memory page frame.
Refer the following link: https://support.microsoft.com/en-us/kb/75592
You can try to load EMM386.exe with the NOEMS switch (if you don't actually require expanded memory) - you then replace it with the RAM switch.
Or, specify the space frame address to EMM386.exe. For example:
DEVICE=C:\WINDOWS\HIMEM.SYS /TESTMEM:OFF
DOS=HIGH,UMB
DEVICE=C:\WINDOWS\EMM386.EXE RAM M9 D=64 MIN=0
where M9 = page frame address E000.
Do you have any network cards installed in the PC? If so, remove the card and see what happens.
As a last resort, check your BIOS settings. You can try disabling BIOS & video shadowing.