How Does Max Server Memory Affect PLE on a Host That Is Not Memory Bound?
I'd suspect most of the memory was in use by the procedure cache or another component before you set the maximum memory limit. When you change the maximum memory limit, caches are flushed (you'll see this in the error log), which would have made more space available for caching data pages, which would in turn improve PLE. 

If that is what happened, the problem will likely return in time as usage from the components that were using memory before the flush grows back. As you may know, Glenn Berry has some useful queries for analysing memory usage in SQL Server.

As somewhat of an aside, 1.6 or 1.7 GB was roughly the maximum memory 32-bit SQL Server could use on 32-bit Windows under a default configuration. There are some settings that can allow it to use more memory, but they can cause memory starvation of the kernel or user processes if not carefully managed. On newer, 64-bit versions of Windows and SQL Server, memory management is generally far less problematic.