Hi wamo00, and welcome to the VMware Communities!
A non-PAE 32-bit kernel can only access 4 GBytes of address space, and that address space needs to contain about 1 GByte of stuff that isn't RAM. The rest of the RAM will be mapped above the 4 GByte mark, and won't be accessible without a PAE kernel.
The "other stuff" that must live within the first 4 GBytes of address space: The VM's firmware (BIOS or EFI), some memory-mapped CPU management features (APIC, HPET), PCI memory-mapped IO regions (the Super VGA framebuffer is one example), memory-mapped PCIe device management interface.
That only leaves room for about 3 GBytes (3072 MBytes) of RAM that is accessible to a non-PAE kernel. The PCI hole's location is controlled by a pciHole.start VM config option -- it defaults to 3072, and I have never tried adjusting it upwards, so I don't know if it will work at all...
Hope this helps explain the situation. If you must use a 32-bit kernel and need to access more RAM, you should use the PAE kernel.
Cheers,
--
Darius