What you need to do is either eliminate the virtual memory or bring it down to maybe 96mb.
I haven't used the older OS in a while, I'll have to check when I go home (I have another older Mac). I can tell you how to either turn off virtual memory or lower the amount.
You can run os 10 on your iMac but it won't be any quicker than what you have now if anything, it might be slower. Stick with the OS9 you have. OS X was a bit buggy so you would have to go like 10.2 but like I said, stick with the one you have now.
Oh, it just came to me LOL.

Ok on the left top under the apple icon click on that, scroll down until you see memory, I think you either have to click on that or go to the right (in a sub menu). open it and I believe the settings for the virtual memory should be there ( I think )

You might also want to try to rebuild the desktop which is an easy to use utility.....

This is what you want to do, Restart your computer while holding down the Command and Option keys.
When you see the dialog that says "Are you sure you want to rebuild the desktop file on the
disk "your disk"?," release the keys and click OK. You will see a scroll bar going across I think, when it's done, restart your comp again.
Another reason why it might be slow is because of the extensions that are turned on...I'd tell you all about it but I have to go back to work LOL.

-Erik