i have a pretty old cpu config with AMD Athlon X2 4000+, 3 gb ram and asus M2avm-hdmi motherboard.
My question is what hard disk capacity i should go for? i was planning for 500 gb or 1 T Tb(both SATA 7200 RPM). Please suggest and help me with this.
This entirely depends on what you are going to do with the machine. If it's just web browsing, email etc then basically anything over 100g should be fine. If you plan on storing lots of music, movies, pictures etc you will need a lot more space. If you plan on installing a bunch of games you will need more space.
I would look at how much media you have on your current drive and select your drive based on your consumption rate. I myself have a lot of music and video files so I run my OS/Program Files on a 120 GB SSD and I put a 1.5 TB secondary HDD in for my media files.
The 500gig drive should be a tad faster now if you will notice that speed difference is a toss up. There are a lot more factors then rotation speed of the hard drive to determine how fast it will be.
The mother boards SATA interface plays a part
The Size of the Hard Disk will play a part (bigger means windows has to take longer to find the information you need)
The cache on the drive will play a part also (16mb cache vs a 32mb cache or even a 64mb cache).
There is also solid state disk to look at if your wanting pure speed over storage.