Thanks for all the suggestions so far and let me clarify a few things:
I have XP Pro with the Norton firewall and antivirus on all the time. Being a paranoid, I also have the free AVG virus software and the XP firewall on as well since I cannot affect to be infected by anything. This set up worked fine before I had the RAM upgrade and the 2 new monitors linked. So I am not sure if it's a coincidence or not.
My hard drives are NTFS and being a 4 month old machine, it has lots of hard disk space left and I just did a defrag a week ago just to be safe. I slowed down the hardware accelration this morning and it didn't really make much difference. I have just done a freeRAM pro cleanup but I don't know if it works or not as the markets are now closed, so the IG data refresh rate is very low in any case.
When the IG page is on, the Task Manager CPU graph oscillate between 30 and 100% most of the time, it goes up and stays at 100% throughout when I have other applications on. I have noticed the IG page can start off with 30Mb'ish then going up to 50+Mb.
When I tried to use the Sun Java, IG asked me to leave the last of the MS Java box checked rather than having everything unchecked. The way it sucks all the memory when IG is loaded led me to think it's more to do with memory or cache sharing, or temp folders getting choked up, but I have set IE6 to automatically delete all the temp internet files when closing down, so I don't know where else the memory drain can be.
I had the "virtual memory running low" message coming up every now and then before the RAM upgrade(hence the upgrade), and I originally set the VM paging file size to be 3Gb, but I switched back to "system allocated" as someone told me it would be slower than using just the RAM.
Regarding whether the new RAM is compatible, it's made by Kingston specifically for this particular Dell model, and it's the same model that one can get on the Dell web site. BTW, if you ever need to upgrade your Dell RAM, their own brand product seems to be twice as expensive as their approved suppliers'. They didn't have the Kingston one in stock, and I ended up buying it from DABS at a 25% discount(may be that's why it doesn't work!).
Normal web browsing and Microsoft applications seem to be running fine, so this is a bit of a puzzle to me.