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Sony Vaio laptop showing 1.6 GB RAM usable while 4 GB RAM is installed??

Today I bought a Sony Vaio VPCYB25AG/B Laptop with configuration-

AMD Dual-Core Processor E-350 (1.6 GHz)
320 GB HDD
AMD Radeon™ HD 6310 integrated Graphics
Genuine Windows® 7 Starter 32-bit

And it had 2 GB DDR3 RAM from factory which I got upgraded to 4 GB DDR3 at the shop. When I checked system properties at home, in front of RAM it showed 4GB (1.6GB usable).

I have a program that requires minimum 2 GB RAM on WIN 7 32-bit. When I installed it showed that I have less than 2 GB available RAM so the program will not work as smoothly as it would if I had atleast 2 GB of RAM. But the system has 4GB of RAM and even if integrated graphics have taken even 1 GB of RAM then still I would have 3 GB RAM which is more than enough to run that program. But it still showed that low RAM error.

Anything I can do to solve this?
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rindi
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You'll have to get another Windows version. Starter only supports a max of 2GB, and part of that is probably assigned to the Graphics card. If your app also runs on a 64bit OS I'd get a 64bit version of Windows 7. Otherwise stay with Windows 7 32bit, but get something above starter. If you are using this for work, then get at least Pro and not a home version.
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Can you please list the Windows 7 versions that support RAM above 2 GB. One more thing, can I install a 64-bit version of Windows on this laptop?
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rindi
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So I don't want to buy a new Windows 7 OS to get my 4GB RAM working. And I've bought the laptop today its not even one day old.

So I have two options, first is to return or exchange the lap from the sony outlet where i bought it from. Second is to install another version of Windows 7 that supports more than 2 GB of RAM.

If I choose the second option and as you've said above about "Anytime upgrade", does that mean that I can upgrade from Windows 7 Starter to Ultimate or Home Premium without any cost?? If that's true then will you please tell me how to do that. Thanks for your inputs so far.
Ok I've got it, I'll have to pay to upgrade from starter to other version. Guess I'll have to get it returned.
No, the upgrade isn't free. You will probably have to use your credit card, or maybe you can also do it via PayPal. Also I don't know of the cost as personally I have never used that, but it's probably the cheapest form of upgrading available. Just check if there is such an icon on your desktop and if there is, click on it.

Apart from that, if you bought the laptop from the same vendor you got the memory upgrade from, he should have known that Starter can't use all of it, and made you aware of that....