Here's my config.
hdd1 = OS,
hdd2 = DATA: Page File, My Documents, Downloads, Movies, Files, etc...
With 4 gigs, page file size was set to 2 gigs, and xp only uses .04gigs.
So, yes, memory is better, but moving the page file to the secondary drive will help performance, because, as you access the program files, you can access the page file at the same time. Whereas, on the same drive, both will be in sequence, as opposed to parallel.
So, put your page file on the second drive, and you will notice an improvement.