This week's book giveaway is in the Reactive Progamming forum. We're giving away four copies of Reactive Streams in Java: Concurrency with RxJava, Reactor, and Akka Streams and have Adam Davis on-line! See this thread for details.
When do you get the OOME, when you run Eclipse itself, or when you're launching a program from within Eclipse?
If it is in Eclipse itself, then what you wrote above is not the correct way. Open the file eclipse.ini which is in your Eclipse installation directory with a text editor (Notepad for example) and add a "-Xmx..." line. This is, for example, what my eclipse.ini looks like (running Eclipse 3.4.2 on Windows XP):
You can also use the JMX jconsole app to check VM memory usage.
However, you've set up the memory parameters for one specific execution of the indicated Java application, operating as an external command invoked by Eclipse. External Tools aren't "Java apps". They can be any application executable at all, Java or not, including shell scripts. If you launch a Java application as an External Tool, the VM parameters you set on its command line will only apply when using that particular launch configuration. You can just as easily set up an alternate External Tool configuration that launches the exact same program but with entirely different VM parameters.
And neither of those sets of parameters would be applied when you launched the same application inside Eclipse's Run/Debug environment. Each Run profile has its own VM settings.
Being persecuted doesn't in any way prove your righteousness or your beliefs. Many people get persecuted because they are repugnant or annoying. Or just because they can be.
You are not looking for eclipse .exe, you are looking for jave.exe. If there is no java.exe while your app is running, then you are running the app within Eclipse, in which case follow Jesper's recommendations.
If you do find java.exe, look at the Command Line column (you might have to add that column to the display), it shows you the full command line used to start the app. Do you see your memory setting there?