I recently purchased a server with similar specs to a small instance Amazon EC2 VM. I thought this would be a good test machine for a web server role I'm planning to run in EC2. However, midway through the Windows Server 2008 R2 install, Windows refused to continue because my machine had less than 4GB of RAM.
I've seen others who have claimed to run small instance EC2 instances with Windows 2008 Server AMIs. How does that work?
Are you sure you are not trying to run Small Business Server 2008? That has a requirement of 4GB and it will halt installation if it has less than that.
Windows Server 2008 Standard only has a requirement of 512MB of memory, so you should be more than ok.
Source:
http://www.microsoft.com/windowsserver2008/en/us/system-requirements.aspx
I've run into the same problem when trying to install some versions of Windows on virtual machines. My solution was to increase the amount of RAM for the install, then reduce it back to what I had originally intended to use. In each case Windows ran just fine with RAM distinctly less than that required for the install. Of course those were only test machine, so would never see real production loads.
I realise this may not be quite so simple to do with a physical machine, unless of course you have some suitable RAM you could use temporarily.