While doing photometry in some rather large images with DAOPHOT, the allstar I experienced a panic from IRAF:
PANIC in `/iraf/iraf/noao/bin.linux/x_daophot.e': Memory has been corrupted
By googling the exact error I hit on this post in iraf.net (#136679) where the problem presented was exactly the same. The solution is simple to change the cache parameter from yes to no (by epar allstar).
As Mike mentioned:
The ‘cache’ parameter tells the task to try to keep (up to) three images plus a starlist in memory to improve the processing time (as opposed to hitting the disk repeatedly). Practically speaking, what this does is consume a lot of the physical memory and if your images are very large you may be using a lot of swap space and losing any benefits, it may also be amplifying the effect of a memory leak and leading to the error (just a guess). In any case, if it works without the cache then keep going with that.