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Bo,
hate to say it, but I got that message ALL the time with DSS, irrespective of what settings I used etc etc. Mono or OSC, or DSLR. Didn't matter. DSS just rarely worked for me. So, I went to CCDStack and never had a single issue since.
I know, it's pricey, but worth every cent. I know its not helpful in fixing DSS, but I simply could NOT fix DSS (and I have high-end laptops, and it still used to run out of memory on me etc - is there a true 64bit version of it????). CCDStack not only does what you want, but VERY quickly and with magnificent results, even using odd sizes together etc.
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