Ok, i found the setting. It is NOT in the datamodeler Folder in datamodeler64.conf (this is really messy, why 2 config files??)
Use this file:
C:\Users\YOURUSERNAME\AppData\Roaming\Oracle SQL Developer Data Modeler\220.127.116.113\product.conf
Change the Xmx Parameter (i am now trying "Xmx2g") ---
To update the Java properties, the file to be updated has changed for Data Modeler version 18.104.22.1683. The AddVMOption statements should be updated in the product.conf file rather than the datamodeler64.conf file. Assuming you're on Windows 7, you should normally find the product.conf file in folder C:\Users\<your user>\AppData\Roaming\Oracle SQL Developer Data Modeler\22.214.171.1243.
There is now a forum specifically for Data Modeler topics. It's SQL Developer Data Modeler
The change was made at the framework level (read: not by us) to allow for the application to accommodate multiple users per install on Windows.