Disable all unused services by going to run->msconfig->services .
Another best way is..
In task manager you can find out the memory usage of each process. Look for the process which is taking more amount of memory and close it if it's an unwanted or unused process.
It may also be due to virus.
Use a good antivirus and scan your computer..
Closing unused programs and services will help to reduce memory usage, as Harinath has already mentioned.
If you know all those services are needed, consider installing more RAM ;-)
85% memory usage seems a little high to me and I wonder if this leaves enough working memory for other processes. What do others think?
When your system runs low on physical memory it'll make increased use of virtual memory, typically stored in a file on your hard disk. As I'm sure you know already, disk access is much slower than physical memory access.
You can find out which processes are using virtual memory by monitoring your system's resources. Start Task Manager, select the Performance tab, and click on the 'Resource Monitor...' button. The Resource Monitor utility will appear. Select its Memory tab and watch the 'Hard Faults/sec' column. Hard faults occur when memory has been swapped out and is no longer available in physical memory.
Taking a quick look at your screen capture of Task Manager, aside the numerous hosted processes, I notice you have SearchIndexer running. This service is useful if you often need to search through the content of files on your system. My own personal experience is I can live without this, and turning it off can make a noticeable difference to performance.
You also have a process using a user mode driver. See if you can replace this with a kernel mode driver, or disable it. You may notice an improvement in performance depending on what the hosted process does.