I still think there is a bug in SSMS. Why would SSMS crap out everytime ? I had even tried moving the DB onto a server with 32 GB memory, out of which only 16 GB was allocated to SQL Server. I ran the query from SSMS on the server itself.

The profiler, on the other hand, captured what I needed. The profiler didnt even break a sweat(in terms of memory usage). Sure smells like an SSMS bug to me.