I faced this problem.
It can be caused by a lot of reasons , and in the 64-bit version too.
Many specialist say that 32bit hardware and OS cannot address more
than 4GB RAM, because the address is 32 bit long:
2^32 = 4GB
But there remains a question - how the heck the 32-bit server editions of Microsoft are capable of addressing more than 4GB???
I read it on a forum, and I think its true - Microsoft wants to make people totally migrate on 64bit OS. That's OK, but I do not agree, this to be done by force, and to restrict 32-bit OS.
The solution is here, Russians know how:
Sign in, its Worth.
*they update it periodically, so you can also try from http://staforce.msk.ru/load/
THIS program allows you to use 4GB and more in Windows 7 32-bit. You can also remove the watermark logo in the lower right corner of the desktop.
BUT beware - it converts the NT Kernel!
It makes a bootup menu, and you can select - the modifyed kernel (up to 128GB RAM), or the original (up to 3.25GB RAM).
P.S. (26.05.2012) - this program is not available any more, and the domain is closed....