90% memory usage at idle - computer freezes

I have an EEEPC netbook model 1025c which has 1Gb memory and came installed with Windows 7 starter. From the start it ran poorly until I disabled Aero and basic themes - it is now on "classic" I believe and looks ugly but is now actually functional!

One remaining problem is that it consumes 90% of the 1Gb just sitting there. Actually it's more like 99% of the memory on Task Manager. Firefox keeps stalling and completely freezes for 1-2 minutes on heavy pages (e.g. bbc news).

I disabled superfetch and prefetch but this had ZERO effect on the memory usage, despite what I've read in many places.

The ony thing that "works" - in the sense that memory usage is lower and Firefox runs smoothly - is using Wise Memory Optimizer to free memory when it gets above 50%. It's annoying to run an extra process to counter other processes that are killing this little computer. I would rather disable whatever Windows7 is doing to fill up the memory.

Clearly Windows7 can run fine using only 500Mb (because that's what I set it to on Wise Memory Optimizer). So what is using all the extra memory? How can I run a minimal version? Superfetch doesn't seem to be the culprit.

Post a screenshot of Task Manager - Performance tab, without Wise Memory optimizer running.