Major Memory issue

Hi, i just bought a Dell 4550 with a 60gig harddrive and 512Meg of memory and a 2.6gig processor. It is about 2 weeks old. I have loaded only Paintshop pro v7 and Microsoft Office XP w/Service Pack 1 on it. I did immediately, before loading these two applications upgrade to MS Windows XP Professional (with SP1). I am experiencing a significant performance issue that i think is related to memory.

Basically when i first boot up the system it runs VERY fast afer an hour or so of working on it, it comes to a complete crawl when switching betwen screens or just general performance and runs out of memory. I have been running a log on the available memory and what is happening is that it is running out of memory, even with only one application running, or running nothing at all except the performance monitor. My available memory gets down to an average of 2 megabytes, even with no application loaded except the performance monitor. Also, just sitting there watching the performance monitor graph over an hour or so with no apps loaded or me doing anything the available memory goes back and forth from an average of 2 megabytes and then spikes for a few moments to a max of 412megabytes and then back to 2 megabytes. During this process I have exited all applications.  Obviously, with the system running with an average of 2 megabytes available it is VERY frustrating - it runs slower than the pc i replaced that had 128megabytes of memory and 400mhz processor.  Hellllpppppppp!