Bumping it up from 512MB to 1GB of RAM usually helps a bit. (1GB of RAM is the "sweet spot" with XP).

What is the make and model# of the hard drive?

Have you run a:
chkdsk c: /r
command? Chkdsk.exe is a command-line tool that checks volumes for problems and then tries to repair any that it finds. For example, Chkdsk can repair problems related to bad sectors, cross-linked files, directory errors and lost clusters.