A 32-bit OS can't use more than 4GB of memory. To do so, you have to use a 64-bit operating system.
You can't simply upgrade any 32-bit version of Windows to any 64-bit version of Windows. Instead, you must perform a full, clean install to change.
In your situation, the amount being indicated is normal. Part of the memory is also be allocated to your video adapter and system devices.
To use all 8GB of installed memory means changing your OS to a 64-bit version.