I ran into this EXACT same problem when I started to nest clips within clips. It seems the tiered nesting is the root cause of all my problems.
When I went in and deleted a nested clip (that I also through a cross dissolve onto) the problem went away.
My workaround was to export any “nested” clips as a standalone QT movie and then bring that into the sequence I’m working on. This eliminated the sequences within a sequence tiered nesting that brought on the “Sequence not found” error and “Not Enough Memory” error message.
Has anyone else tried this or found this to solve the problem?