Hi Mark,
System Memory is usually counted independently from Graphics Card Memory so your current system only counts the 2 gig of RAM on the motherboard as being available to the OS, Windows XP 32 bit.
If you upgrade the RAM to 8 Gig then XP 32 bit will only access the maximum for itself which is 4 gig, of which you would find about 3.75 Gig is actually used. The other 4 gig that you have on board should not cause a problem with XP32 bit. If/when you run a 64 bit OS then, of course, all 8 gigs of RAM would be used and be available to you.