Memory and disk storage both refer to internal storage space in a computer.
The term memory usually means RAM (Random Access Memory). To refer to hard drive storage, the terms disk space or storage are usually used.
Typically, computers have much less memory than disk space, because RAM is much more expensive per megabyte than a hard disk. Today, a typical desktop computer might come with 512MB of RAM, and a 40 gigabyte hard disk.
Virtual memory is disk space that has been designated to act like RAM. For more information, see the Knowledge Base document What is virtual memory?
Computers also contain a small amount of ROM, or read-only memory, containing permanent or semi-permanent (firmware) instructions for checking hardware and starting up the computer. On a PC, this is called the BIOS.