OTL does show 1 Gb of RAM, but do you have an onboard graphic display or a separate card ? If it is an onboard one then that will use a set amount of your RAM for all graphics

Lets clear the temp files, what defrager are you using ?

Clear Cache/Temp Files
Download TFC by OldTimer to your desktop

[*] Please double-click TFC.exe to run it. (Note: If you are running on Vista, right-click on the file and choose Run As Administrator).
[*]It will close all programs when run, so make sure you have saved all your work before you begin.
[*]Click the Start button to begin the process. Depending on how often you clean temp files, execution time should be anywhere from a few seconds to a minute or two. Let it run uninterrupted to completion.
[*]Once it’s finished it should reboot your machine. If it does not, please manually reboot the machine yourself to ensure a complete clean.