SDL Tridion 2012 UI - Error when updating preview and publishing - tridion

Question

I am installing the cd_preview_webservice on Tomcat which also has applications for the staging web site (to be use for the UI) and the cd_upload (which deploys to the web site) installed.
When I click the 'Update Preview' or 'Finish Editing' I get the following error:
com/tridion/deployer/TCDLTransformer
Also this send the tomcat process to 100% CPU usage.
I have re-read the instructions and I can not see where I have made my mistake. Any help much appreciated.
Thanks
Mark
I have done some more digging and it would appear that I get a session preview Id saved into the database in the 'PREVIEW_SESSIONS' table but others are empty. Which I find odd.
I also found that the following web service call 'http://bbtrid04/WebUI/Models/SiteEdit/Services/Services.svc/GetPreviewToken' receives the following response:
{"ExceptionDetail":null,"ExceptionType":null,"Message":"PermGen space","StackTrace":null}
and the localhost log file contains the following error:
07-Aug-2012 17:34:04 org.apache.catalina.core.StandardWrapperValve invoke
SEVERE: Servlet.service() for servlet httpupload threw exception
java.lang.OutOfMemoryError: PermGen space
at org.apache.commons.fileupload.disk.DiskFileItemFactory.createItem(DiskFileItemFactory.java:199)
at org.apache.commons.fileupload.FileUploadBase.parseRequest(FileUploadBase.java:361)
at org.apache.commons.fileupload.servlet.ServletFileUpload.parseRequest(ServletFileUpload.java:126)
at com.tridion.transport.HTTPSReceiverServlet.handleUpload(HTTPSReceiverServlet.java:233)
at com.tridion.transport.HTTPSReceiverServlet.doPost(HTTPSReceiverServlet.java:108)
at javax.servlet.http.HttpServlet.service(HttpServlet.java:637)
at javax.servlet.http.HttpServlet.service(HttpServlet.java:717)
at org.apache.catalina.core.ApplicationFilterChain.internalDoFilter(ApplicationFilterChain.java:290)
at org.apache.catalina.core.ApplicationFilterChain.doFilter(ApplicationFilterChain.java:206)
at org.apache.catalina.core.StandardWrapperValve.invoke(StandardWrapperValve.java:233)
at org.apache.catalina.core.StandardContextValve.invoke(StandardContextValve.java:191)
at org.apache.catalina.core.StandardHostValve.invoke(StandardHostValve.java:127)
at org.apache.catalina.valves.ErrorReportValve.invoke(ErrorReportValve.java:102)
at org.apache.catalina.core.StandardEngineValve.invoke(StandardEngineValve.java:109)
at org.apache.catalina.connector.CoyoteAdapter.service(CoyoteAdapter.java:298)
at org.apache.coyote.http11.Http11Processor.process(Http11Processor.java:859)
at org.apache.coyote.http11.Http11Protocol$Http11ConnectionHandler.process(Http11Protocol.java:588)
at org.apache.tomcat.util.net.JIoEndpoint$Worker.run(JIoEndpoint.java:489)
at java.lang.Thread.run(Unknown Source)
07-Aug-2012 17:34:05 org.apache.catalina.core.StandardWrapperValve invoke
SEVERE: Servlet.service() for servlet httpupload threw exception
java.lang.VerifyError: (class: org/apache/commons/fileupload/disk/DiskFileItem, method: getUniqueId signature: ()Ljava/lang/String;) Illegal constant pool index
at org.apache.commons.fileupload.disk.DiskFileItemFactory.createItem(DiskFileItemFactory.java:199)
at org.apache.commons.fileupload.FileUploadBase.parseRequest(FileUploadBase.java:361)
at org.apache.commons.fileupload.servlet.ServletFileUpload.parseRequest(ServletFileUpload.java:126)
at com.tridion.transport.HTTPSReceiverServlet.handleUpload(HTTPSReceiverServlet.java:233)
at com.tridion.transport.HTTPSReceiverServlet.doPost(HTTPSReceiverServlet.java:108)
at javax.servlet.http.HttpServlet.service(HttpServlet.java:637)
at javax.servlet.http.HttpServlet.service(HttpServlet.java:717)
at org.apache.catalina.core.ApplicationFilterChain.internalDoFilter(ApplicationFilterChain.java:290)
at org.apache.catalina.core.ApplicationFilterChain.doFilter(ApplicationFilterChain.java:206)
at org.apache.catalina.core.StandardWrapperValve.invoke(StandardWrapperValve.java:233)
at org.apache.catalina.core.StandardContextValve.invoke(StandardContextValve.java:191)
at org.apache.catalina.core.StandardHostValve.invoke(StandardHostValve.java:127)
at org.apache.catalina.valves.ErrorReportValve.invoke(ErrorReportValve.java:102)
at org.apache.catalina.core.StandardEngineValve.invoke(StandardEngineValve.java:109)
at org.apache.catalina.connector.CoyoteAdapter.service(CoyoteAdapter.java:298)
at org.apache.coyote.http11.Http11Processor.process(Http11Processor.java:859)
at org.apache.coyote.http11.Http11Protocol$Http11ConnectionHandler.process(Http11Protocol.java:588)
at org.apache.tomcat.util.net.JIoEndpoint$Worker.run(JIoEndpoint.java:489)
at java.lang.Thread.run(Unknown Source)

Answer 1

When the JVM loads classes it puts them into the PermGen space of its heap, which defaults to 64MB.
The stack trace you showed is a dead give-away that your JVM is loading more classes than it has space for and would definitely explain its complaint about not finding the TCDLTransformer.
I typically have a -XX:MaxPermSize=256m in my setenv.bat to ensure there is enough space. Depending on how you start your Tomcat, you may need to put it there or in the service runner parameters.