Hi David,
the first thing to look at would be: Why do you want to export the raster and then make contours? Have you tried creating a MosaicDataset from your data (regardless of las files direct or LAS dataset, and then ...
- Use the contour function to create raster contours
- OR export contours as vectors
Just to make sure there is no general issue, I just ran the tool on a LAS Dataset with a few GIG of LAS in it .... i set the Sampling Value high, though, to be quick. The tool ran smooth. These were my settings (the exclamation makr is because I took the screenshot after the tool finished:
I did not need to set any other environments ... and for output-data naming: Specify the extension and ArcGIS will honor this, if you need more settings, check environment
Regards
Guenter