Windows 7 Computer recognizes 8GB of ram, but only uses 30% of it?

[Mistle]

Windows 7 Ultimate x64
Intel Q9550
ATI radeon 5770
P5QPL-AM ASUS motherboard
OCZ 8GB (2x 4GB) Platinum series RAM. pc2-6400 DDR2, 240 pin, non ecc, unbuffered

I have installed 8GB ram into my computer. Both my BIOS and system properties state I can use all 8GB of it. However- even when I put my computer under huge strain, I've never seen it go higher that 30-31%. It idles on about %20, so that means when I put strain on it, it only ever goes up by %10! I have not set a limit in msconfig either.
It's frustrating me why my computer isn't using all my ram. If anybody has any suggestions, let me know!

Here's an example: I open Photoshop (64 bit version) with a huge canvas (A0), and went crazy with a large brush. I've allowed PS to use %75 of my memory. PS lags heavily, yet my ram will not budge higher than 30-31%. Here is a screenshot of it. The ram is the steady blue line.

I assumed Photoshop would utilize the remaining RAM instead of slowing down dramatically. I upgraded my RAM so I could work with large resolutions without lag, however the lag is still heavy. Am I wrong to think Photoshop should be using the remaining RAM and stop lagging?
I would be extremely thankful if anybody could share any thoughts/information. Thanks

EDIT: Just re-phrasing, as I realized I might be a little unclear..
I set my memory usage in PS to use 75% of it, which is about 6GB. However, as I've said, Photoshop continues to lag with large canvases/brushes, and never uses more then approx. 2500 MB ram.
That's my main concern. I assign a potention 6GB for photoshop to use, yet as shown in the pic, it never goes over 2500mb. I believe if there was a way to let photoshop REALLY use 6GB, it would stop lagging and run smoothly ^^' is this correct or am i misguided?

 

[Saltgrass]

I will post Link Removed due to 404 Error from Adobe, but it is old and may not reflect Win 7 operations. It is interesting it mentions if the allocation is set too high, it might slow down your system.

I do not use Photoshop, but it seems I remember something about the scratch discs or the number of backup versions you have. The more being maintained, the slower the system goes.

To check your information against something I have access to, you might try typing perfmon /res in the search box on the Start Menu. Look at the Memory tab on the bottom of the page. If you like, use an advanced response and attach a snipping tool picture of that bar using the paperclip. Maybe we will see something.

One more thing, are you sure you are using the x64 version of Photoshop? One answer to your post on the Adobe forum has some good information.