Error reading variable str (value requires 146297 bytes more than max value - size) What does that mean?

Question

I am trying to create a program which does:

1. Find the length of the largest word, the lines & the number of letters
2. Store the data from a file to string (str)
3. Store the data from string (str) to a dynamic allocated array

text:link

My program does not store the words in the array

I used a debugger link and I notice that the problem was in str variable (error reading variable str (value requires 146297 bytes more than max value - size) What does that mean and how could I fix it?

#include <stdio.h>
#include <stdlib.h>
#include <string.h>
#include <ctype.h>

int main()
{
    FILE *fp;
    fp = fopen("C:\\Downloads\\AlicesAdventuresInWonderland.txt", "r+");
    if (fp == NULL)
    {
        printf("cannot open the file\n");
        exit(8);
    }
    char ch;
    int len = 0, counter = 0, thelongest = 0, letters = 0, i = 0, j = 0, k = 0;
    for (;;)
    {
        ch = fgetc(fp);
        letters++;
        if (ch == '\n' || ch == EOF)
        {
            if (thelongest < len)
            {
                thelongest = len;
            }
            if (len > 0)
            {
                counter++;
            }
            len = 0;
            if (ch == EOF)
            {
                break;
            }
        }
        else
        {
            len++;
        }
    }

    printf("the number of lines is : %d", counter);
    printf("\nthe length of the longest word is : %d", thelongest);
    printf("\nthe number of letters is %d", letters);

    char str[letters + 1];

    rewind(fp);

    char **arr;

    arr = (char **)malloc(sizeof(char*) * (letters + 1));

    for (ch = fgetc(fp); ch != EOF; ch = fgetc(fp))
    {
        if (!ispunct(ch))
        {
            str[i++] = ch;
        }
    }
    str[i]= '\0';
    rewind(fp);
    i = 0, k = 0, j = 0;

    char tempstr[thelongest + 1];

    for (;;)
    {
        if (str[k] == '\n' || isspace(str[k]) || str[k] == '\0')    
        {
            if (k != 0)
            {
                tempstr[k] = '\0';
                arr[j++] = strdup(tempstr);
                k = 0;
            }
            if (tempstr[k] == '\0')
            {
                break;
            }
        }
        else
        {
            tempstr[k++] = str[i++];
        }
    }

    arr[j] = NULL;

    for (i = 0; i < counter + 1; i++)
    {
        printf("\n the words are %s", arr[i]);
    }
    return 0;
}