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If you do have a 64bit system which I assume you do based off of the fact you have a Program Files (x86) and not just Programs File folder where Java is installed. Then you need the Java 64bit version to allocate more than 1GB. I suggest about 2GB if you have 4GB or more. Check out the recommended install guide for the link to update your Java. You might also want to follow the guide again to remove the dash (-) in front of your FTB folder as well. However, if Ashzification is correct in that your version of Windows 7 is 32bit then you need to drop the texture pack if you are using one.
I have a 64 bit o/s and i will try to allocate more than 1Gb, the sliding bar wouldn't let me go any further then 1 but i will try again. IS there any reason why it wouldn't let me slide it past the 1 GB mark? It said it was the max.
Then you need the Java 64bit version to allocate more than 1GB. I suggest about 2GB if you have 4GB or more. Check out the recommended install guide for the link to update your Java.