It appears to me that all 384Mb is recognized and working. If I read the question right, a few tweaks might be necessary to free up some memory. Although Trevor stopped updating this site in 2005, it's pretty much the bible for setting up Me. Other pages to help setup Me are out there too and are worth a try.http://www.burzurq.com/forum/trevtweak.html
Also, the Windows 9x kernel is notorious for memory leaks. That memory doesn't actually leak out onto the floor; a program needs some memory to run and doesn't give it all back when that program is terminated. Games are usually the major culprit. The answer is generally to reboot, especially between games.
Me was released 8 years ago when IE5.5 and the various flavors of Netscape/Mozilla used little memory. Now days, you can expect IE6 and FF3 to use quite a bit of memory (the entire 128Mb stick when both are running).
MsInfo can be a big help when you want to see what's going on in Me...http://support.microsoft.com/kb/278449
Bottom line: 384Mb is plenty to run Me even with today's memory hogging applications.
A final tip. Don't listen to those who tout Me as the worst Microsoft OS ever. Properly set up, it's both stable and reliable.