When do you know you need more ram?

My current system is: intel core i5-750 quad core 4gig ram 1600 600gb 7200rpm HDD running on windows 7

When I look at the performance monitor my memory rarely goes above 50% of total memory usage.

What is the preferred memory usage percentage at any given point in time for a system to run smoothly and stable?

It doesn't really work like that on Vista or Windows 7, not anymore. Both aggressively cache stuff into RAM, and release it if more is needed for an application. I'd say you only need more RAM when you can imagine filling it up with day-to-day applications - similarly to hard drive space, you only have enough when you have more than you can fill up :)

That answer largely becomes based on your usage preferences. On a parallel note, it is possible to disable much eye-candy which can make the system much more responsive.

In your particular case, it seems that you have a sufficient amount of RAM, but are potentially limited by your bus width and transmission rate. This can mostly impact how fast new data can get into RAM. My suspicion is that your computer is very much usable and that you should have no concern unless you are using some heavy duty applications.