I tried it on 2 other machines with the same tech specs and ArcGIS build as mine but I still got the same error.
I can't answer your question regarding the raster size since I'm just converting a terrain dataset to raster and the tool doesn't finish processing. However, it produced an incomplete DEM with this dim 19743 x 38266
e = arcpy.Describe("myinput").Extent print e.width / 30, e.height / 30
>>> 19743 * 38266 * 4 / ( 1024. ** 2) 2881.9489974975586
A neat trick to use when saving to tiff is to integerize the output as it is compressed size that counts toward the 2.1G file size limit -- elevation surfaces often compress well.
When you say integerize the output, is there a way to do this trick using ArcMap/ArcCatalog?
arcpy.env.terrainMemoryUsage = True