I've run into the same problem, but with a 16GB SD card. So I think it's nothing to do with space on the card itself.
Note for new users with only RCA (no HDMI)... pressing 3 or 4 won't necessarily work! Fortunately, I managed to get access to HDMI.
When my Pi boots, it puts up a window saying "Error Resizing Partition". You need to press Enter to make this go away. Then you can press 3 to switch to composite output. (Of course, by now you can't see the original error dialog!) Here is a screenshot of the dialog in question (apologies for the quality, but images have to be , 64KB!)
I'm guessing that this has something to do with this whole thread.
The SD card was a used one, had been formatted with Linux, but when I couldn't get anything on my (composite) screen, I took the card and formatted it as FAT32 with Win7, following the instructions in the QuickStart guide. Incidentally, there are a whole lot of options in both those formatting programs that aren't mentioned in the guide... I just accepted defaults where the Guide didn't tell me what to do.
incidentally, a useful diagnostic is whether your keyboard works (Num Lock button turns NumLock LED on/off) or mouse works (optical mouse has a red light shining out the bottom of it). If both these things work, you know that you have power, and that your Pi has booted sufficiently to make USB work, which pretty much excludes a crash of the processor, memory, etc. If only one works, then the other one is probably faulty. If neither works, it's probably something serious in the Pi itself, or the SDcard.
From there, I tried using Ubuntu to repartition the SDcard into an 8GB FAT32 partition plus 8GB free, and removed everything but Raspbian from the os folder. No change.
I then formatted the SDCard as FAT16 4GB and copied NOOBS (only Raspbian in os
) onto it again. Hooray! It booted. However, it still seemed to have difficulty reading the SDcard, saying it couldn't install anything unless I plugged in the wired network. I did that, and it reformatted the SDcard, and is now downloading and extracting Raspbian.