4GB Ram Usage, And Gaming Lag Issue?

i recently purchased a gaming pc which runs all games pretty much maxed out,
the specs are: powercolor hd6850
700watt tsunami psu
msi p55 gd55 motherboard
4gb of ram
i5760 - 3.4ghz with a coolermaster cpu cooler

my problem is Tf2 is always lagging and crashing, and i looked online awhile ago about the issue and it seems it has something to do with not enough ram being allocated to the game or something?
in Dxdiag, my Gpu shows 2gig, when its only a 1 gig card, so i think some system ram is being allocated to the card, and it processes in windows task manager it says

Physical Memory: Kernel memory
total - 3063 paged - 202
Cached - 1299 non paged - 52
available - 1872
free - 643

does this mean i only have 643 mb of ram to run the game? should i get an 8gb upgrade and will it make a difference? thanks so much
i have a hd6850 though which is a pretty decent card... i dont think i need to upgrade anything in that area
the highest process i have running is steam - 78k, so theres no problems or viruses hogging my usage

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