i think you could tweak until the cows come home and your still gonna have alot of drag.
xp is such a resource hog that i don't even install it on systems below 1 gig cpu's.
of course if you could beef up the memory some more that could help.
you could also go in to services.msc and disable some xp programs.
here's a good guide for such.
msconfig also and shut down any startup programs.