My computer wont recognize all my ram

Do you have another stick of RAM installed? What size is it?

Why do you think it is only reading it as 1 GB ?

May have a problem, Read this
Quote: If you feel like all netbooks sport basically the same specs, that's because they do. It's not that manufacturer's don't want to jazz things up, but rather Intel has their rules about how much RAM can be included with an XP netbook running on the Atom CPU (1 gig) and max display resolution, and Microsoft has their rule about max hard drive size for netbooks (160 gigs). Once in a while, manufacturers negotiate a rule break (for example the Vaio W has a higher resolution display) but nearly all run on an Intel Atom CPU (a single core, hyperthreading low power CPU designed for netbooks) with 1 gig of RAM, Windows XP (because Vista is too piggish for netbooks) and a 160 gig hard drive. Variation comes in the cosmetics, wireless, display quality and software.
End quote. I add the Bold face type
This is from a review of your Netbook: http://www.mobiletechreview.com/notebooks/ASUS-Eee-PC-1...
IF TRUE Blame Intel and uSoft for such a lousy position.

Question did this come with XP and you installed Win7??

There is only 1 slot for RAM since it is a netbook. I replaced the stock 1 Gb RAM with a stick of 2 Gb RAM. The 2 reasons I think it is only reading as 1 Gb is because when I go into system properties, it says that there is only 1 Gb of RAM installed. Secondly, when I run the Crucial scanning tool again on it now, it also says I only have 1 Gb of RAM installed.

No, it came with Windows 7 Starter and I installed Windows 7 Professional because I get it for free from my school.

Also, here is a quote from that review you put in your post, "Speaking of tweaks, it's incredibly easy to upgrade the machine to 2 gigs of RAM, which is the max. There's a small door on the netbook's underside for the RAM module and there's one slot, which means you'll toss the included 1 gig module to install your standard DDR2 667MHz SODIMM." So I should be able to upgrade it to 2 Gb no problem.

Agreed, should be based on your Quote. I wonder if they acually tried it, or just made a blanket statement.
Not sure if Asus has a "chat" window in their support website, if so might give it a try. Would not cross my fingers as I find the knowledge level for support very lacking at least at the couple I've tried (Were not Asus).