The trick to using XP or 7, on an older computer, is just to turn the automatic updates off, entirely.
It's the updates, that are not compatible, with your older system.
Instead, an all in one professional security system / firewall should be used (not the free one).
If you leave the updates off, and use a good security (not the free ones), either one (7 or XP) will work.
However, the more updates installed, the slower it may run, and the more likely it won't run at all.
Generally speaking, The updates don't work on older machines, but the OS does.
Update will cause loss of video, BSOD, loss of DVD / CD drive, loss of drivers, loss of audio, on older machines.
A. Manufacturer might have a list of incompatible updates.
B. Manufacturer may have bios update, but I would not recommend you try it, unless you are solving a specific known issue.
C. Updates to bios may crash the machine, entirely. Be aware that any security / firewall installed may prevent updating unless it is turned OFF.