thank you for your reply, LouisBlack.
Here's what did so far: tested the memory - both 1GB work great on mem.slot 1; the only condition on which slot 2 recognizes its memory is when you start up the mac with only one piece of memory (on slot 1), then move this memory onto the second slot and only then my mac starts with slot 2 working. However when I afterwards insert the second memory right after I have successfully booted with only the first one on slot 2, it simply does not recognizes there are 2GB. I reset nvram/pmu (a few thousand times). Took off the battery for some period of time..
It seems, after all, it is something else that differs from the memory and the famous slot issue. Never did any firmware updates/editing. I've been using Tiger 10.4.11 and there is no logical reason to me for this to has happened due to some interaction on my behalf.
I'd be thankful for any other ideas.