Hi Chris,
I did certain changes of destroying objects through DEACTIVATE event, but there have been no any success as there are code that manually destroys each component and resets dw\dataobject\datastore explicitly. And I confidently say this because same web application having same code deployed on EAS5.5 through PB10.5 consumes all the xml data without any thread\memory error.
Now I have new server setup EAS6.3.1 running on JDK1.7 is getting this memory\thread error, so it seems there is something in EAS6 & JDK1.7 architecture that might be consuming more memory space compared to EAS5.5 & JDK1.5, but this is my assumption comparing execution of application on different EAS & JDK versions.
I have configured EAServer Monitor and it works fine. I can analyse JVM memory statistics, but since it's not the solution, your kind support is required.
Thanks,
Kunal