No need to start over.
First off, swap usage should stay at or near 0 so long as you don't run out of physical ram. The way Linux (and most all OS's I know of) do memory management swapping is the absolute last resort. Why? Because it is really really slow compared to accessing physical RAM. 700MB of RAM is a pretty decent amount and I could easily believe that you aren't ever needed all of it at once. So long as your total amount of swap isn't 0k (run top to check) your fine there.
Now... as for how "free" memory is reported. The kernel gets a lot of requests for memory. As a result, it tries to minimize the amount of actual work it has to do in a couple of different ways. First off, it always gives a process a bit more then it needs to start out with. That way if it grows a little it doesn't necessarily mean the kernel has to allocate more memory to it. When a process dies the kernel doesn't necessarily go back and reclaim all that memory right away. It basically just leaves it there, knowing full well it is actually free, but keeps it allocated to the previous task. Now if something comes along that really needs memory it can go ahead and free that left alone block and allocate it to the new task, but until that happens it really isn't a big deal for it to just sit there. This saves a lot of memory options, but as a result it often looks like your memory usage is a lot higher then it really is.
So in short... I'd say your system is probably working just fine.
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