Why does Windows only show about 3.5 GB of my 4 GB of RAM?

"You can't:

See Dude, Where's My 4 Gigabytes of RAM?

if you want to fit memory and devices into a 32-bit address range: not all of the available 4GB of address space can be given over to memory.
So what actually happens if you go out and buy 4GB of memory for your PC?
There's a hole in your memory map for the IO. (Now it's only 25% of the total address space, but it's still a big hole.) So the bottom 3GB of your memory will be available, but there's an issue with that last 1GB.

The only practical solution is to install a 64-bit operating system. In Windows Vista and later, 32-bit and 64-bit license keys are interchangeable. If you can get Windows installation media for the 64-bit version of your operating system, you can reinstall using your original license key."

"If you are using a 32Bit Windows XP, then it's not possible. Since there is not enough Address Space available for making use of the extra RAM

The best solution would be to upgrade to a 64-Bit Version of Windows as it supports 4+ GB of RAM."