How can I make Windows XP use more than 2.5GB of RAM?

First of all, do not statically set or get rid of your swap. Doing so is more or less saying that you know more about what is going on in the internals of your operating system than Microsoft does.

One thing to keep in mind is that all of your graphics cards, all pci devices, etc that have addressable memory on them are taking away from the maximum amount of memory in your system. After you subtract that memory from your physically addressable memory, you will have the portion that your OS and Applications share.

If you need to extend the amount of RAM your apps have access to, there is a switch that can be set in boot.ini, but this can constrain the amount of memory windows has to work with.

Tim Slattery did a good article on windows ram usage.

There is a great explanation of the page file's importance and usage in response to this serverfault question.

To gain more usable memory your best bet is to upgrade to a 64-bit OS which will be able to make use of a full 3.5+ gigs of RAM.

Firstly, I'd change your swapfile from a tiny fixed one to system managed. Windows is trying to help you and you keep stopping it.

The other point is have you tried testing your RAM chips? Could be you start seeing these effects at around 2.5GB because one of your RAM chips is faulty and you start hitting the problem chip around then.