Thanks to scrollbob for putting things into perspective. I have worked out the fact that the system is taking up roughly 891mb.
The internal storage is devided into two parts. 2gb is internal memory of which 1.1gb is available for installing applications. The rest about 891mb is taken up by Android system files.
Then theres the additional internal storage called (External Storage SD Card 2gb). Combined the internal storage and the internal sd storage you get 4gb.
I have taken a closer look at the memory distribution by using System Panel Lite > Meny > System Info > Storage.
I hope this puts the matter to rest for anyone who is thinking of sending their scroll excel back like I did. I will be cancelling my return now. Thanks once again to scrollbob for making the effort.
Now back to angry birds! Oh by the way happy new year to all.







