Well, linux has a little different philosophy about memory usage.
MS-DOS uses only very 'low' parts of your memory. MS Windows tries to have as much free memory as possible. Linux uses all your memory because you have it.
In my case (512 MB), I have no swap space in use, and the remaining 300 MB of free ram are being used as disk cache.!! (seriously!) When linux requires more memory, the disk cache seams to shrink instantly. I really noticed a big difference when I upgraded my machine from 256 to 512 MB ram.
So maybe you have memory errors, only haven't noticed them under MS Windows (yet). The memcheck tool could be useful in this case.
Please remind yourself that something else could be wrong too, because you're using an old 486. What information does linux reveal during the boot process? Where does it stop?