I have a Dell Laptop with 4G which shows 3.46 available in the System dialog.
Open the Resource Monitor and look at the graphical representation. My hardware shows 552MB, and the other numbers on the bottom may help explain your situation.
How is your memory installed? 2 x 2 G?
I think Hardware reserved is normally for video, but not certain that is all it is used for. It may show in the bios how much is used for video and may be adjustable. But if you want the better graphics, it needs memory.
At least all of your memory is being recognized.
No, it is necessary for the video. But you would be able to use more memory so the Hardware Reserved would be less of a problem.
Have you checked to see if you can add more memory to that laptop?