windows xp - Why is my system so slow when I have so much RAM?

So I have a computer with 3.45 GB of RAM according to my OS (XP). I have 2 GB virtual RAM.

My company pushes Excel to its limits of referencing other worksheets which eats up a lot of resources. Often times when it is running calculations, saving, etc the program will appear to hang for sometimes as much as 10 minutes.

When looking to see what the issue is I notice the processor is usually running at about 8-12% but the RAM is usually 250,000+ KB. This causes my computer to run slowly which would make sense to me if I only had 512 or maybe a Gigabyte of RAM. I know that 250,000 is quite a bit of memory to be used for the OS, but having a total of 6 GB, I would expect much better performance.

Is there an explanation as to why it would run so slow?

edit: I should clarify. I'm looking for more of the concept behind this not just a solution to my computer running slowly (that was just supposed to be an example). I was under the perception that I should be able to use nearly all my RAM before noticing serious speed changes that would affect my whole system.

Answer

Might some of these referenced spreadsheets be on a LAN? If so, what sort of connection do you have to the files on the LAN (100mbit, Gigabit, wireless, etc)?

Excel is very "chatty". Especially when you're dealing with reference spreadsheets and data spread out across various resources, it can take a lot of communication for the application to send and receive necessary information. If most of the files are on network shares and network drives, this may explain at least a chunk of the slowness you're experiencing.

Further, regardless of how much memory you're using, you'll probably find excel.exe usually doesn't take as much memory as you expect it to take. Are there other processes that are running on your computer that aren't necessary? Lots of taskbar icons (next to your clock) that you have no idea how they got there or what they're for?

Finally, lots of companies leverage Excel far beyond it's best functions, like it seems your company does (why, oh why don't they use a database when they need a database and leave Excel to the simple data recording and processing functions????), I've found that comparing the speed of Excel on our older/slower machines (4 year old IBM desktops 8215 and 9645) and newer/faster machines (6month old desktops, 3269, 9964), and there is no significant difference.

Depending on how the macros and code connecting the spreadsheets is written, there may be what are essentially hard limits to how fast that spreadsheet can collect and process the data it needs.

All you can do is identify and mitigate all the possible points of slowness you can, and hope for the best.