How to increase the amount of memory sql server uses on the server? On the db server, we have 4 GB of memory. Currently, the memory utilization of Sql Server 2005 on that server is 1,725,000 K and the total memory usage is stable at 2.04 GB. The Cpu usage on the server though is at 99% almost constantly. 

How can I increase the memory that Sql Server uses so that it performs more operations using memory rather than reading from disk etc.?
This is configurable through SSMS.  However if you have a 32 bit build and are not booting with the /3GB switch the figures shown look suspiciously like the hard limits that will be imposed by the operating system anyway.

You can configure it from SSMS by right-clicking on the database server in the explorer, and you can see the memory usage policy under the 'memory' set of properties.

If you have a 32 bit server you may be able to use AWE to get more than your 2GB or so, although older versions of Std edition Windows (2003R1 and earlier) still restrict you to fairly small memory sizes.  If you have a more recent version of the operating system and a 64 bit build you should be able to use up to 32GB of memory.