Those older machines often had the SETUP application on the HDD. Later it was moved to the BIOS. There are also a lot of rules about memory that will be hard to relay over a forum but nothing sounds wrong with your observations so far. That's how it worked back then.
You should find old hardware that has issues with RAM like that. Again, nothing is wrong here. It was limitations of chips, chip select lines and more. So moving on...
It's possible that dell has some setup app on floppy media. You'll have to look for that.
I have a Dell Dimension V350 (win95) that is run occasionally and complained about lost date and time settings - so I replaced the CMOS battery. Now it won't boot
On power up fans and hd starts spinning and display lits up saying:
PhoenixBIOS 4.0 Release 6.0
Copyright 1985-1998 Phoenix Technologies Ltd.
All Rights Reserved
Copyright 1985-1998 Intel Corporation.
Dell Dimension V350
BIOS Version A05
Pentium II processor 350 MHz
64 MB System RAM
Press <DEL> to enter SETUP
then nothing happens and it doesn't respond to <DEL>. <Ctrl-Alt-Del> restarts the process but it ends up in the same spot.
If I hit <Del> while it is counting memory up to 64 MB it instead ends up with
Entering SETUP ...
on the bottom of the screen and nothing happens.
Only response I get is a beep when hitting <any key> after that I have hit it several times before.
I'm a little puzzled over that it only counts up to 64 MB as it is equipped with two memory chips labelled "PC100-322-620" which I belive are of 128 MB each. Removing one or the other of them stops the counting at 32 MB.
I'd be much obliged for any help on this,