Your load profile is pretty light, you'll probably find
you'll get a massive performance increase just by reinstalling windows and your applications. A P4 266 with 512MB should be totally up to the job. Neither webserfing or MSN chat are CPU or memory intensive.
If you are experiencing performance problems it's could well be a network issue, i.e. your connection to your ISP.
If you were decoding a video in the background it would be a different matter.