Defrag the hard-drive next time you're there......right-click on the drive in the My Computer window, go to Properties, then in one of the tabs, you should have the option to Defragment Drive or something similar. If it's never been done before, it's likely it'll take a while (my brother hadn't done his for 6-9 months, his computer was running painfully slow, and it took 12 hours to do it, but his computer is now running quite a lot smoother). Ideally, you'll want to be running it every 2 weeks or so, but it does depend on how much you use the computer...

I'd say 256Mb is bare minimum, but again, it does depend on what you use the computer for......might be worth looking at upgrading to 512Mb, if possible.