There is no problem.
Windows XP 32-bit edition has reserved 0.75GB of address space on your system that is being used for communicating with devices such as the graphics card, USB ports, SATA ports, audio, ..., etc.
If you want to to use all 4GB, and you need a consumer edition of the Windows operating system, you will have to move to a 64-bit edition of Windows.
As an example I have 8GB of RAM in my system. Windows XP Professional 32-bit edition only recognizes 2.50GB because I have two graphics cards in SLI in my system. When I'm running Windows 7 Ultimate 64-bit edition I am able to see and use all 8GB.