Large Images >3mb Fatal error : Out of memory on save

PHP memory limit 512M (From Drupal Status Reports Page)

Fatal error: Out of memory (allocated 60293120) (tried to allocate 16640 bytes) in

There's inconsistency here. 60293120 bytes is only 57.5MB. Considering a 3.5MB image might be 4288 x 2848 pixels, keep in mind that GD has to use an *uncompressed* version of the image in order to manipulate it. This means about 4 bytes per pixel (assuming RGBA) 4288 x 2848 x 4 = 48848896 bytes (or 46.5MB). Add in the extra overhead of Drupal (32MB) and you'll run out of memory.

But... as you say you have a limit of 512MB. But what seems to be happening is something is setting a lower limit while an image is being generated. Check if you have code anywhere that is using ini_set() to increase/decrease the memory limit to this lower number.

Does this seem to indicate that my server is only allowing 96mb memory_limit even though I have set it in PHP Config to 256?

Yes that sounds exactly like what it's saying. Depending on your host, they may cap your configuration limits to avoid your site from affecting the service of other sites on the same server. You might try running a simple PHP script designed to hit the ceiling like this, and see where it caps out. Just put it in a stand-alone php file and run it. If you hit a limit at 96MB, it sounds like a limit set by your host. If you hit a higher limit, then you probably have an ini_set() somewhere in your own code that is setting the limit lower.

There's a million ways you could exhaust the memory manually, but here's a simple approach:

$variable = '';
while (TRUE) {
  $variable .= 'lorem ipsum ';
}

Eventually $variable will get big enough to exhaust your memory.