If you want Forge to have a decent amount of RAM you will need to run the jar through command line or a .bat file (.bat means batch file and is a "batch" of CMD commands that get executed one after another).
If you launch the server using this method you will need to leave the CMD window open or else the server will stop HARD (meaning it might not have a chance to save everything and things might get corrupted).
You have 32-Bit Java, which only allows about 3GB of RAM, some of which is needed by Java's backend so it can't reserve enough for Forge AND the backend.
You will need to get 64-Bit Java 8. (The Java 8 part is important because Forge does what it does by leveraging black magic that is unique between Java versions)
Don't start the server, just press the windows key, type in cmd and press enter.
That will bring up the command line, then in the command line type java -version
Java will only use as much memory as you tell it to use, right now you aren't even giving it half a gig.
Use the arguments described on this Minecraft Wiki page.