SQL Server 2005 uses 1GB of RAM
SQL Server 2005 Express Edition is limited to 1GB of RAM for the buffer pool. Non-express editions, by default, will not be limited unless configured to set a max. In either case, the usage will typically not decrease unless memory pressure forces it, or the service is restarted.


Multiple instances will definitely impact performance, especially if their memory allocations exceed physical memory, and the I/O contention can slow things down for concurrent queries.
Inactive databases will have no impact, other than the disk space they consume.