Explanation for the above issue - may help some people! I've spoken to Microsoft about this (have a technical support agreement through my company) and they've spent this week looking at this issue. A senior tech engineer has said that this occurs on some boards because the BIOS Memory Remap, remaps the entire top 2GB of physical ram above the 4GB physical boundary.
This is ok for Vista x64 as it will find and use all 4 GB but 32-bit Vista won't find or use it and will only have the bottom 2GB of physical memory that it can use.
Unless the vendor (Asus in this case) changes the memory remap architecture, there is nothing that can be done about this.
Additionally the MS engineer says it will never be possible to get the full 4GB in Vista 32-bit. The best one can get is 3.xGB in the 'non-remapped' mode.
This is from the guys that wrote the MS KB doc 929605 click here
They are looking into why MS KB doc 929580 contradicts this, click here looks like a rogue doc - PAE makes no difference (for me at least) on the above points.