Have just bought 256Mb memory made by Crucial, but not bought from them. It is the same spec and code as recommended by Crucial for this m/c.
When installed Everest home edition finds only 128Mb, but under the SPD tab, it identifies it as 256Mb. Is it possible that half of the memory is faulty, and the PC still works with the half that is okay?
Do you have onboard graphics? If so and this is the only slab of memory you have installed at the moment then it may be set in the BIOS to use 128mb for the graphics, therefore you only have 128mb left. If this is the case then go into BIOS and alter the amount of memory assigned to the graphics to 64mb, I doubt it will affect the display you have and may let the programs run faster.
I have the same problem with an old gateway PC It has two RAM slots and the manufacturer's data suggested that it would support 256Mb But I found out (to my cost) that what they meant is that each slot would support up to 128MB each so giving a combined memory of 256Mb. I only found this out after I purchased a 256Mb card and like you only 128 would show.