A7 reads the free video memory amount from the DirectX driver. It's theoretically possible that the driver gives a wrong number, but the numbers I've seen so far were correct.

Video memory is consumed mainly by textures meshes.

The E_OUTOFMEMORY error message is not from the engine but from DirectX, so maybe the reason is something else. I've seen wrong DirectX error message before. It would be useful to know which command causes the error message.