If you have 2GB of physical RAM installed, Windows is only able to report a portion of the physical 2GB of RAM depending on the devices installed, motherboard's chipset & BIOS.
This behavior is due to "memory mapped IO reservations". Those reservations overlay the physical address space and mask out those physical addresses so that they cannot be used for working memory. This is independent of the OS running on the machine.
Significant chunks of address space get reserved for use by system hardware:
•BIOS – including ACPI and legacy video support
•PCI bus including bridges etc.
•PCI Express support will also reserve memory if a graphics card is installed.