I have the same thing. 5 year old Pentium 4 with 2.0 GB CPU, 256 MB RAM etc. Mine used to be really, really, REALLY slow. I've got it to a stage where it starts up in less than 1 minute, shuts down in 20 seconds and can do everything I need it to do comfortably fast enough. My RAM usage at startup is normally something like 125 MB (down from 300-350 at startup) and normal working range is around 250 - 350 MB.
First thing to do is to download the XP Tweakguide from tweakguides.com, written by a guy called Kharoush Gazi (really knows his stuff) and second thing is to check how large your virtual memory is set to. Normally this is set as a default value to be something like 1.5 times the system RAM. Increase it so that the physical RAM and virtual memory together add up to about 2.5 GB. This I found improved performance beyond belief. (Start/ Control Panel/ System then click on the Advanced tab. Under Performance you'll find a tab that says Settings, click this and then the middle tab (Advanced) At the bottom you'll see the Virtual Memory with a button called settings. Try changing the size of the pagefile to at least 2 GB.
In order to sort out the startup issues (what to start and what not to start) read up in the XP tweakguide ( I think it's called the Tweaking companion nowadays), by the way this is a free download although you can give the man a donation if you want. He also has a Tweaking companion for Windows Vista.
Let us know if this helps.