New to the board, because I've got the same problem
Specs:
Win XP Home SP2
AMD XP3200+ (Non-OC'd)
ATI 1950PRO AGP (256MB) w/ 7.7 drivers
1GB system memory
latest DirectX9.0c
USB sound (LTB 5.1 headphones)
ArmA v.1.08 Eng.
I can usually run it about 10 mins. before the game stutters to a halt and the "CreateIndexBuffer failed (8876017c)" message pops up as I CTD, though sometimes it's just the Windows "Program must now close" box. There's no apparent difference from before the patch (v.1.06) to now, no difference if I use the "-maxmem" switch, higher GFX settings bring the end a little faster, and the "flush" technique might buy me a couple more minutes of time.
The only proposed fix that I haven't tried is bumping the AGP aperture up to 256 (it's currently 128). I may get ambitious and try it, but I'm not going to hold my breath.
Hopefully, with so many of us having the same (or similar) problems, BI will be able to plug that memory leak.
Edit: Added sound capability info.