Problem Solved! I checked the bios and there is biostar overclock section. in there i was able to adjust the ddr frequency to 1066mhz which is the right match for the dual channel kit, I reboot and hey presto it recognises 4gb and dual channel!
I have dbbl checked with cpuz id and it had confirmed. Only thing im still suspicious of is that cpuz says this is pc2-6400 when its actually pc2-8500. im not complaining though as they are both roughly running at 533mhz/534mhz on average each.
Id just like to say thankyou all for your help, you guys gave me some real pointers and it let to sorting the problems out with this troublesome pc and its helped me to not be afraid of fixing something without fear of breaking it! might just have a go at seeing how far I can overclock this thing, i only want to reach about 3ghz or so.