Having trouble: Adding RAM with a USB memory stick to a Windows XP desktop that has 4GB installed

Short form:

I want to use a 16GB USB flash drive memory stick as RAM, but seem to be unable to use more than 4GB, due to the system requirements, limiting what I can enter for values (size). WHY??

More detail:

The computer is a desktop machine, having a 3.0GHz dual-core processor, and 4GB RAM installed. I believe the hard drive is a 1T.

I have a 16GB USB flash drive memory stick, which I want to use to boost the RAM, for games, and such. There are 3 spare USB ports on the back of the tower. The flash drive is new, with NO files saved on it.

When I go into the Settings; Computer; Virtual Memory, the computer is not allowing me to enter a value greater than 4096 in the field for "Initial Size" or "Maximum Size", for the Page File of the USB drive.

The Value for C: that I see is: "2096-4092".

Main Question:

Is there some reason why I cannot allocate more of the memory stick for RAM?  

(Does the flash drive need to be formatted?)

Does the values for C: need to be changed?

I presently have "4090" entered for values "Initial Size" and "Maximum Size" in the custom size, for the Page File of the USB Drive.

Screenshot provided of Virtual Memory Settings screen: (you can see the L: drive settings (selected), and the C: settings, also)

http://prntscr.com/336ocy

Question 2:

Also, is the "4G" of RAM which I have added to the machine, being added to the 4GB which is already installed in the tower?

Question 3:

Does the OS wait until the system RAM is full before using the External RAM?

Thanks!

edit to add:

What I learned from Microsoft article "How To Set Performance Options in Windows XP":

http://support.microsoft.com/kb/308417/en-us

To manually change the size of virtual memory, follow these steps:

...Note After you change the size of the paging file, you may be prompted to restart Windows. If you are prompted to restart, the changes will not take effect until Windows is restarted. 

...

• To have Windows select the best paging file size, click System managed size. The recommended minimum size is the same as 1.5 times the RAM on your computer, and 3 times that figure for the maximum size. For example, if you have 256 MB of RAM, the minimum size is 384 MB, and the maximum size is 1152 MB.
• For best performance, do not set the initial size to less than the minimum recommended size under Total paging file size for all drives. The recommended size is the same as 1.5 times the RAM on your computer. It is good practice to leave the paging file at its recommended size as performance can decrease if a paging file is too large. However, you may increase its size if you frequently use programs that use lots of memory, such as graphics programs or games.

What I am unclear of here, is that, as you can see in the screenshot, the Recommended Size under Total paging file size for all drives is 3019M.

And, the values set for the Paging File in C are 2046-4092.

The tower has been rebuilt, and has 4GB RAM.

I do not know if these numbers reflect an original build of 2GB, whereas 3GB (3019M) would be 1.5 times the installed RAM, perhaps.

Under Virtual Memory, I see the following (shown in screenshot):

Drive C

Space available: 725194MB

*Custom Size

Initial Size: 2046

Maximum Size: 4092

Total paging file size for all Drives

Minimum allowed: 2MB

Recommended: 3019MB

Currently Allocated: 2046MB

Given that the system has 4GB RAM installed, shouldn't the minimum be 1.5 times that value, or ~6000MB ? (not 3019MB), and the maximum be 3 times ? (not 4092)

"The recommended minimum size is the same as 1.5 times the RAM on your computer, and 3 times that figure for the maximum size."

Can I change the values on the Virtual memory for C drive to 2046-12000MB ?

That is what I am reading from the article. But, it also says to not have a paging file on the same drive as the programs.

"Try to avoid having a paging file on the same drive as the system files, usually drive C."

Also, why am I unable to enter values greater than 4096 for the USB drive in Initial or Maximum?

I also have a question as to whether I should select "Programs" or "System Cache" in memory usage, due to the cache requirements of games, running very few programs. 

edit 2:

I learned that the usb drive needs to be formatted in NTFS, so I did that, which isn't easy, as that isn't a selection in the choices in the Format menu, without going into Device Mgr. 

A friend was telling me about formatting a usb drive ex-fat for a newer application, and got me thinking. I had selected FAT32 for this one, and had noticed no change in the page file graph usage after adding the drive, like it wasn't getting any data placed on it.

So, as custom settings for this USB drive, I have the Initial value at 4091 and the Maximum at 4096, with "System Cache" selected as opposed to "Programs" in Memory usage, in Performance settings.

Any answers or tips would be appreciated.

Am I on the right track?