I can’t say what can be done, this probably depends on a usage pattern. I have about 200 users and have 742 MB java memory set and it rarely uses that much. Though at some point i had out of memory errors and server freezes. A few versions of Openfire ago it was running fine with much less memory. I think in some recent versions a memory leak was introduced somewhere. Though this spike of memory usage happened while we were migrating to Spark (used Exodus previously). So it can be even client related i think.
Do you have a system property xmpp.pep.enable which should be set to false? Though memory leak in this module should be fixed in 3.8.2 version. What version of Openfire do you use?
Lastly, it is surprising to see such an old Java 6 still in use Is it the one bundled with Openfire? You can try removing it and installing current Java 7 version. Not saying it should fix the memory issue, but who knows.
You have Java 7 installed, but in this screenshot i see that Java 6 is in use. You should stop Openfire and delete jre folder in C:\Program files\Openfire. Then it will use the system’s Java 7.
You have to create this system property if there is none. But as i said, it should be fixed and probably won’t change anything. Still worth trying.