There are 3 different things:
- Disk Space (this is what you're talking about when you say all programs go to the hard drive)
This has nothing to do with the following:
- Memory (the amount of RAM, or physical memory that is internal to the computer.)
and
- System Resources: areas of memory that are used by the input manager (USER.EXE) and the graphic display interface manager (GDI.EXE) for keeping track of all of the windows that are open in a session and for drawing objects on the screen.
Each application that is loaded, and each window and child-window that is open, consumes system resources. Typically an application consumes 2-8% of system resources, and each child-window consumes 1-2%. Closing an application should release its allocated system resources, but some software is not as well behaved as it should be and this release may not happen. If the free resources fall below about 10-15%, serious problems may be encountered and Windows should be restarted as soon as possible.
As you install and use more and ,more demanding applications, not to mention operating systems (XP), it's entirely possible you may need more RAM in the forseeable future.
Interesting article: <A HREF="http://www.aumha.org/a/resource.htm">Resources vs. Memory FAQ</A>