Vegas 7.0e only seems to recognize a fraction of physical memory available. I have 4MB RAM in a Dell XPS Desktop. Other programs show the memory but Vegas only recognized 2MB of physical memory, allowing just 1MB of memory for Max Dynamic RAM Preview.
I believe that you mean GB (gigabytes) not MB (megabytes).
Anyway, all 32-bit programs will only see and use 2GB of memory. This is not a limitation of Vegas. For that matter, Windows itself will only use about 3.25 GB of your 4GB RAM, unless you're running a 64-bit version of Windows XP or Vista.
I've never tried to make this work with Vegas, because I only have 2GB of RAM. But it apparently does work with many 32 bit programs. Changing the setting in the EXE header can be done easily with a program called NT Core Explorer:
Be aware that you're talking about altering the Vegas executable. As far as I know, Vegas **As Designed** does not use more than 2 GB of virtual address space
A 32-bit x86 application can be compiled to use more than 2 GB. Premiere Pro is compiled this way, Vegas is evidently not and only uses up to 2 GB (like nearly all other 32bit windows apps). You could certainly try hacking the Vegas executable as described. Good luck, I'm sure we'd all be curious to hear how that works out.
You also need to configure windows to allow applications to use more memory, of course.