The main reason is that Liquid War keeps on allocating and freeing bitmaps. And sometimes there is not enough DPMI memory to create bitmaps. If this happens, Liquid War should exit and give you a short description of the problem.
But it is also possible that Liquid War exits with a page fault error without warning you. This is often because the GUI manager of Allegro NEEDS free memory to work correctly. And if this memory is not available, it crashes... I have tried hard to work this arround but could not make it. All you can do to avoid this is to give Liquid War more DPMI memory and try and reduce the -mem n command line parameter.