32bit equals 4GB's of memory addresses. More than RAM uses memory addresses so OS will never have the full 4GB's available to it in a 32bit OS as RAM. Hence why it will only use around 3GB ram with the graphics card he has. Explained in detail here
You are right it is explained here
Most if not all 775 sockets motherboard have that switch in the BIOS as I mentioned it earlier. I am running Windows XP 32 on a laptop and the OS uses and sees all the 4GB of ramIn the absence of the /PAE switch