That is normal for a 32 bit machine.  Has to do with other devices using some memory spaces.   A better explanation is at crucial memory site.

http://www.crucial.com/kb/answer.aspx?qid=4251




First off this PC is completely and entirely custom built. The Original RAM
used was DDR2 5400 1Gb (1stick). When I upgraded I bought the same kind
going from 1gb to 4gb. 4gb happens to also be the maximum my motherboard can
hold. Now when I go to control panel -> system -> It reports 3.25gb? Why? Is
there something wrong? I pulled out the original 1gb stick and checked to
see what it did and on reboot it said 3gb. Keeping in mind this is the 1gb
stick I used all along before the upgrade I put it back in and on reboot
once again it said 3.25gb!

-- 
GeorgeMary Skokan	skokans at gmail dot com

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