I believe the System process is the Windows kernel. In my experience it is not unusual for it (and other OS kernels) to eat up a significant amount of memory, even when the system performs normally. I'm not sure how you could get it to use 0.1 MB, unless you embarked on some massive purging of filesystem caches or something.
I can't say exactly what happened here (not enough of a Windows geek).
However, looking at your Process Explorer log, I see stuff that probably shouldn't be there:
sqlwriter.exe 1,420 K 4,504 K 1844 SQL Server VSS Writer - 64 Bit Microsoft Corporation
aspnet_state.exe 1,332 K 4,104 K 3696 Microsoft ASP.NET State Server Microsoft Corporation
>>> I'm not that familiar with Windows 8, but these are the sort of things one would normally see on a server, not a desktop. Serving up web content from a desktop is a security hazard. If this is for a class and/or experimentation you might want to use a virtual machine, otherwise you should probably serve the content from a dedicated computer.
AVG-Secure-Search-Update_0414c.exe 1,584 K 452 K 3584
>>> This looks like part of AVG, not sure what it's doing on a system without.
I'd also recommend uninstalling the browser toolbars.