As Shaggy said, FBReader reads the entire ebook into memory - so large CHMs don't work. You could try adding swap space - I don't know how to do this on the DR1000S but see
Swap on iLiad. Adding enough swap to allow 150 MB CHMs may not be practical though.
Calibre has just recently added a (beta) CHM input option. So try CHM -> MOBI using Calibre. If it does not work, post a ticket to Calibre (which is very good at responding to issues). The built-in MOBI reader does not read the entire ebook, so this might work. The downside is that the next DR1000S firmware will drop MOBI support.
Another option might be someone porting a GTK+ based CHM viewer to the DR1000S.