Hi,
There is no size limitation to a string variable in TestStand. The ultimate size of the string should depend on the amount of memory in your system. I would try skipping the steps inside of you callback (i.e. the one that does the assignment to the file global) and then run your sequence. Does the error still happen? After the second time, what is the size of the string that you have? If you look at the report generator it creates a string that contains the whole HTML report (i.e. very large). Try tracking the memory usage using the Task Manager in Windows and see what the SeqEdit.exe process does.
Bob