Memory is there to be used up to the most. And if it doesn't fit anymore it's being swapped to virtual memory on disk. In principle: no problem.
Things you can do:
- see if anything unusual is being run at startup (start up tab of msconfig)
- disk cleanup wizard
- run msinfo32 and check the list of active applications for something unusual (it helps if you know what's usual)
- use wintop from the Windows 95 kernel utilities (it runs runs perfectly under Windows 98) to see what processes are using the CPU. You can download the whole package from http://www.microsoft.com/windows95/downloads/contents/WUToys/W95KernelToy/Default.asp
- check if there is a lot of unexpected hard disk activity
If you don't see anything troublesome, you should accept things as they are, I think.
I am running win98se, on a 533mhz pc with 2.2gb left on the hdd. the pc seems slower than usual, & when I run system monitor, only 3.9mb of unused physical memory remain. I only have one ie6 window open, along with the netzero app, and the lexmark print monitor items. 124mb seems like a lot of memory to be used up, considering what I am running. I don't see anything new running under task mgr.(maybe rnaapp...dial up networking...which probably has always been there, I never noticed)