Earlier this week I was following a distribution list thread about setting scratch space size in WinPE 5.0, which both MDT 2013 and ConfigMgr 2012 R2 is using, and I thought it needed some explanation. So here is short post on scratch space in WinPE 5.0, and why you, most of the times, don't need to worry about it.
Background info
OK, scratch space in WinPE 5.0 is used as a temporary storage for log files etc. and is by default stored in RAM, even though you can change that. In earlier WinPE versions you normally set it higher than the default 32 MB, especially if you had custom apps, frontends or scripts running in your boot image. A typically value was 128 MB. In WinPE 5.0 there is no need to do that anymore, but more on that later.
ConfigMgr 2012 R2 lies to you
First of all, don't even bother about looking in the ConfigMgr 2012 UI, because it lies to you. In this screenshot the scratch space is set to 32 MB.

But if I open the WIM and check the real value using the following commands, you can see it's set to 128 MB:
imagex /mount winpe.wim 1 E:\Mount
dism /image:E:\Mount /get-scratchspace

WinPE 5.0 sets scratch space dynamically
Now, in WinPE 5.0, the scratchspace size is set dynamically, meaning most times it doesn't really matter what you set, WinPE will change it during boot anyway. Shorthand, the value is depending on the amount of RAM in your machine. Remember, my boot image is configured for 128 MB of scratch space.
- If you have 512 MB of RAM, WinPE 5.0 won't even boot, and fail with: status 0xc0000017 There isn't enough memory available to create a ramdisk drive
- If you have 768 MB of RAM, WinPE 5.0 will boot, and set it to the value that's in the boot image, in this case 128 MB.
- If you have 1 GB of RAM, WinPE 5.0 will boot, and set it to the value that's in the boot image, in this case 128 MB.
- If you have more than 1 GB of RAM, WinPE 5.0 will boot, and set it to 512 MB.
Summary:
1 GB of RAM or less, the scratch space size is set to the value you configured in your boot image.
More than 1 GB of RAM the scratch space size is set to 512.
WinPE 5.0 booted on machine with more than 1 GB of ram, displaying the 512 MB of scratch space.
/ Johan