The drive would be ATA.
40 gig can be a pretty tight squeeze at times. I know, as that is what I have.
If you plan on keeping your system, here's the main things you ought to look into...
Buy two sticks of 256MB RAM. NewEgg has pqi 256MB 168-Pin SDRAM Unbuffered PC 133 System Memory... two for $70.50 , including shipping.
Get an additional hard drive, either to add storage space, or to replace the one you have now. NewEgg has the Western Digital Caviar SE WD800JB 80GB 7200 RPM 8MB Cache IDE Ultra ATA100 Hard Drive for $55.99, including shipping.
Go for a better graphics card. NewEgg has the VisionTek VTK 9250128A Radeon 9250 128MB DDR AGP 2X/4X Video Card for $60.99 including shipping, and it has a $10 mail-in rebate right now.
All that comes up to $187.48. It would give you a system with a 1.1GHz CPU, 512MB RAM, 120 GIG hard drive space, and a 128MB Radeon 9250 graphics card.
While that may not be top-notch, it is cheaper than buying a new one. Of course, it won't be able to do what a new one can do, either. Best thing is do it as you can afford it. Be sure to get the RAM first, as it will make the biggest difference.