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I don't have a lot of ideas here; usually what makes a Sage notebook server crash is not having enough memory, though I have never actually been watching the terminal when this all happened since I was not the admin. And usually I haven't seen these errors - it's more of hangs.

But my money is on this nonetheless. See here for some general rules of thumb. I found that it was a fairly linear scaling in terms of memory needed per open session, probably somewhere around 100 MB per person (within a factor of two, anyway). So having a 1 GB memory is not sufficient for most medium-sized classes.