I'd like to +1 the Linux idea.
I've been mulling over what to do with (one of) my old XP machine(s) and have been playing around with different flavors (distros) and among all that I have tried the Lucid Puppy is amazingly fast on my old hardware.
Here's a link, first one at the top of the page is Slacko Puppy but if you scroll down a bit you'll find the Lucid Puppy (lupu-528.005.iso) which I burned to a CD-R (it's small enough that you don't even need a DVD).
One other note, the first time you use this Puppy you'll need to install the browser of your choice - that was one of the things that threw me at first - but I figured it out and I'm not all that savvy with the Linux.
I've got another link that will walk you through installing it to a USB if you'd like, otherwise, you can test drive the Live CD and see how your hardware handles it.
Hope that helps.