bad things come from bios flashing only if you choose the wrong damn BIOS or if power goes off during a BIOS flash....other than that you guys are making it out to be worse than it is.
Open up CPU-Z and go to the memory tab and see if it also says 512mb, you could also right click on 'My Computer' and go to properties and it'll say it there too.
I don't understand how both sticks would work seperately, but put in together it doesn't want to see one of them....
beyond that, a BIOS update shouldn't be required, but meh I guess if all else fails you can try that