You know what they say about polishing a turd... no.
LOL, so true! so true!
@OP
the largest thing the hurts performance (on any machine, but especially older ones), is the movement between system memory (which is RAM, and relatively fast), and virtural memory (which exists on your HDD, and is extremely slow). If an extra 256MB of ram keeps you from tapping into virtural memory then it would be worth the relatively minor speed decrease from 400 to 333, but in all reality 256MB is very small these days.
To gain better performance try the following:
1) msconfig->startup items-> deselect anything that you do not need (everything except for windows, antivirus, and driver related software)
2) use a lightweight antivirus such as MS Security Essentials
3) Remove programs and files that you never use, and defragment the HDD once a month to keep your files to the edge of the platter, and more sequential reads instead of random IO (not an issue for win7 which has an auto defrag)
4) Run a good registry checker such as the one in CCleaner
5) Reformat and reinstall the OS (this should be done every year or two on WinXP anyways for best performance)
6) Upgrade to 4GB of ram (winXP will only see ~3.5GB of it though)
7) Upgrade to an SSD with Win7, it can really release the processor of any CPU bottlenecks
8) Upgrade the whole platform; Sometimes a system is just too old to save, and even a new entry level machine($3-500) would be a huge step up.
Try the first 5 things first as they are free and can help a lot depending on how well/poorly maintained the system is, but if that does not do the trick then it is time to invest in a bit of new hardware.
Hope it helps!