The 32 bit OS can not register anything more than 4GB of RAM. It is a limitation that came about cause of the core of the archicture.
32 Bit OS's are not designed to be able to handle more than this. The CPU and Memory are handling it but they can only handle what they are programmed to handle per the OS in use. A 32 Bit OS just can not handle more than 4GB. Back when the 32 Bit architecture was thought up they did not think that PC's would be able to use that much resources. 32 bit was thought about and developed back in the late 80's when 4MB of RAM was considered more than was needed. It is just the limit of the 32 bit OS Architecture. It can not be overcome.
Well if there was a such thing as a 4GB card that would be a start.
But no. The system will use what it needs of the Video Memory for its purposes. So if it needed 1GB for Photoshop or other needs. The Video Memory is a tricky part because it is so widely varied by system. Some systems you might never see the full video card memory even accounted for by Windows. Cause it just doesnt need it.
That is why we say that it is combined with the System Memory. Because most systems dont run a 1GB Video card and 4GB of System Memory on a 32 Bit CPU with a 32 Bit OS.