32 bit OS can access exactly 4096 MB of RAM. However, it has to share address space with the rest of the system. The Video is the biggest swallower of the shared address space. Even if you have a separate video card and memory, that memory count against the address space.
Typically, an older Core2 laptop will have 256MB or less of VRAM. So the amount you actually see is the 4 GB - 256MB - PCI address space of around 64 MB. So around 3.5 GB of RAM.
With Windows 7 and all the extra stuff you run, 2 GB or less will mean it will use the hard drive as memory swap space. This drastically slows the computer down. With 3 GB of available RAM it makes a significant difference. Memory is cheap, max it out.
As for adding a SSD. If it is a Core2 machine, it probably has SATA. Core2 is 9 years old, but still a very good processor. SSD will breath new life into that laptop. You might want to stick to a smaller one and just have an external drive to back up to. Why? Mostly cost. Why put a lot of money into a laptop that you might be replacing in the next year or two? Why SSD? Longer battery life, faster read/write, more durable.
