Well for one, BIOS doesn't have do to with your hard drive partitions. BIOS is the firmware, like you said. Except firmware typically means EFI, which is what OS X uses by default, and that Linux, and recent versions of Windows are capable of using. BIOS is different, being that it is old, outdated, and should be replaced with EFI.
However I've never heard of this problem before. At first glance of the thread title I assumed you probably installed a version of Windows that can't use all your RAM. And I'm still inclined to think you most likely did.
32bit versions of Windows are limited to using 4 GB of RAM at most, as that is an addressing limit of 32bit architecture. You need a 64bit version of Windows 7 to utilize all your RAM.
On top of that, you need a version that will allow full use of your 16 GB of RAM. For some odd reason, Microsoft wants to restrict the amount of RAM certain versions of Windows can use, even when a realistic technical limitation does not exist. As I said before, 32bit Windows
can use up to 4 GB of RAM. However yours is only using 2 GB most likely due to your version.
From the information you've provided, I've deduced that you're most likely using Windows 7 Starter. Which is limited to 2 GB of RAM on 32bit systems.
In order to use your full 16 GB of RAM, you will need Windows 7 Home Premium x86_64 (x64) or higher. Higher meaning the more expensive versions that are still 64bit.
If you're wondering where I'm getting these numbers and this information, Microsoft has it laid out simply here:
http://msdn.microsoft.com/en-us/library/windows/desktop/aa366778(v=vs.85).aspx#physical_memory_limits_windows_7