1. Why do you want to upgrade you BIOS? Do you have a specific problem that it would solve? If not then there is really no point upgrading it.
2. I believe you are already using all the RAM. It's Just that your hardware is using the other 1.5gb. I dont know enough to explain it you in detail but there are lots of links forums and what not out there, just google it
So the short answer to both your questions is you dont actually have ether problem.