Definitely not a problem with XP x64. I have 8GB and it sees all 8GB.I think it might be a limitation of Windows XP, though I would expect it to be much higher since it would kind of defeat the purpose of 64 bit if all you gain is 512MB extra...
This is a shot in the dark, but try enabling VT in the bios. I don't think that would do anything though... but no harm in having that turned on anyway if you want to do VMware stuff. (it's often off by default).
Try going to System Configuration and under advanced options, uncheck the maximum memory option. Restart and see if that helps.