I ran four instances of WoW on my computer and had 90% usage or so, running Vista which wants about 800ish megs, when I had 2GB aswell.
Threw my old RAM out and bought 4GB new and faster ones and problem solved.
Though I had problem with affinity aswell so I can't really say if the memory caused any of the sluggishness, always good with more RAM though.
And since you're running KC aswell I advise you to check manually through Task Manager if your different instances really are using different cores, that was my problem, KC didn't work for me at all when it comes to CPU affinity so I now run HKN to adjust that before I log in.