G'Day Vidda, and Welcome to TSF!
First up, running only 256Mb of RAM with Windows® XP is the bare minimum!
To eleviate all your current issues, you would be best advised to install at least another 256Mb RAM stick.
Now, in answer to your question regarding the discrepancy of installed RAM to available RAM...
Your on-board Video will always require a certain amount of RAM to operate, this is known as 'shared' RAM; hence, you will always have 'less' than you expect to have, but in reality the RAM is there.
Hopefully this brief explanation is enough.
