There are many things that are called "VRAM" in our stack, as well as Microsoft's. The UI setting does control the amount of host resources that we will allow the guest to use, and the guest can use up to that amount. However, the number reported in the dxdiag tool, is the size of the PCI bar(This was never messaged to customers very well.)
You can use the following steps to check the dedicated vRAM: right click on the Descktop:->ScreenResolution->Advanced settings, details refer to the attached screenshot(which I have uninstalled tools), with tools installed there are some 768MB+, I don't know why.
Actually after WS 11 there is a UI option to set for video memory to replace this option.
Thanks