for those having problems getting this to work. i too had a few problems getting it to run properly. the way i fixed it was thus
first follow the steps as they are on the OP
in addition i installed Java SE Runtime Environment 7u80 (as newer java runtimes that i tried did not work)
http://download.oracle.com/otn-pub/java/jdk/7u80-b15/jre-7u80-windows-x64.exei installed this directly into the JRE folder in starsector. which is by default at
C:\Program Files (x86)\Fractal Softworks\Starsector\jre
after i did that. i then modified my vmparams file. here
C:\Program Files (x86)\Fractal Softworks\Starsector
though i would like to note. that even using notepad++ in admin mode still resulted in a failed start by the game if i tried to edit it while it was in the starsector folder. instead i copy pasted the file onto my desktop and edited it there (so i would not need admin to make edits.) and then took the edited file and pasted it back into the starsector file. and overwrote the old file.
the edit i made in vmparams was this -Xms1024m -Xmx4096m which gives me up to 4 gigs of memory to use. so far i have not had any problems and saving so far has not "stalled" when using a high number of mods. in my case that being 14 mods.