The fact that you can only use 3.25 of your total 4 in memory, is a different issue. The .75 is being used by your system.
It has been around, as the OP indicates, since 2003.
" and the test shows that I can use all of this 8 GB RAM."
Which test was that? I have a chip problem on one of my computers. It will run perfectly well on 2Gbs. Putting in 4 gbs causes, among other small problems, the Windows dual boot menu to vanish, and I , by default , boot into the main OS. During the boot period, the computer is in basic VGA mode unitl it intercepts the OS. In the desktop, the various areas (system information etc) show I am using the full 4GBs. I have no indication that anything is responding faster. A memory check, however, shows I have a failure on 2GBS.
A 32 bit OS can only use 4GB of memory total, that means if you have 4GB of ram and your graphic card has 1GB of ram, you have a total of 5GB of memory. Out of that 5GB of memory, you can only use 4GB total. 1GB the graphic card will take up, so now the 32bit OS can only use 3GB.
Enabling PAE, will limit the OS to 2GB total. What PAE does is dedicate 2GB to OS and the other 2GB to anything other then the OS. Some think that some how PAE, can magically make a 32bit OS use more then 4GB, which is impossible. Perhaps a visual from MS itself might help sink it in, you can see it here: Link Removed due to 404 Error