There is nothing wrong with the memory or the computer itself. 32-bit versions of Windows OS have a limit of 4GB RAM, so no more than this is recognised by the OS. The total includes for example, any memory located on attached devices (e.g. sound card, video card).
So if your video card has 512MB of memory and you install 4GB of RAM on the motherboard, the amount shown by Windows OS will be 3.5GB.