BIOS DETECTED 8 GB RAM WHEREAS WINDOWS XP SHOWS ONLY 4 GB RAM

Yes, XP is a 32-bit OS and can only access 4GB of RAM. If you want to access all your RAM install Windows 7 64-bit.

There are 64-bit versions of WinXP, but it was not very common during that time. Most XP installs are 32 bit. Where did you get the copy of XP?

There is some kind of software that does allow you to use more than 4 gig of ram, but any particular process is limited to 4gb, so you could run 2 processes each using 4gig, and be using different ram, but I do not recall what it was, if you are interested I can look into what it was, may require dual core processor, but as stated previously basically more than 4gb ram for 32bit system is wasted.

XP 64-bit is only available as an OEM version, and it is suitable for limited hardware.

What you are referring to is PAE mode which has been available on some Windows Server versions since Win2k. It does not require a dual-core processor, but it requires special motherboard support.