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gwern comments on The Empty White Room: Surreal Utilities - Less Wrong
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It could prove that no relevant mind is simulatable in the bounded amount of memory in the computer it gives you. This seems perfectly doable, since I don't think anyone thinks that Minecraft or Dwarf Fortress take the same or more memory than an AI would...
It hasn't given you a 'universal Turing machine with unbounded memory', it has given you a 'finite-state machine'. Important difference, and this is one of the times it matters.
Good point, and in that case Unseelie would have to limit what comes out of the nanofabricator to less than what could be reassembled into a more complex machine capable of intelligence. No unbounded numbers of seat cushions or any other type of token that you could use to make a physical tape and manual state machine, no piles of simpler electronic components or small computers that could be networked together.