(From here)
I attended an interview last week and this question was asked:
How do you sort a billion rows of data in a file with only 640KB of memory in
Knuth has a whole section on external sorting; this was commonplace back when there were no hard drives & not much memory, and tape drives were the norm. Look at the wikipedia page, and/or vol. 3 of Knuth's Art of Computer Programming.
I agree with Robusto's comment:
Where do you get the file from if you can't use the drive? It's certainly not going to be held in memory.
Not enough problem definition.