Windows 32-bit Operating Systems can only address upto 4GB of available memory. In order to access more than 4 gb of install memory we have to go for Addressing Windowing Extensions. For this set /PAE in the boot.init file and reboot the server.
As per blog http://blogs.msdn.com/oldnewthing/archive/2004/08/19/217087.aspx :
The two are independent. AWE is how programs access physical memory. PAE is how the CPU accesses physical memory. AWE requires PAE in order to allocate more than 4GB of physical memory. You need PAE in order to access more than 4GB of physical memory, AWE or no AWE
For systems having up to 4GB of RAM, Server spares only 2GB for user mode memory (rest of 2GB is for kernel). We can strech up to 3GB by using tag /3GB in boot.ini.
Note: /3GB switch would limit use of memory to only 3GB even if system has 16 GB RAM installed.
Windows 2003 Enterprise Edition can by default address up to 16GB of RAM.
How to update boot.init
Go to My Computer.
Right click -> Properties
Go to Advanced Tab
Startup and Recovery -> Settings