Easy then - accept the Win 7 machine and use it. You will need to in time anyway.
The installation of Classic Shell will ease the transition.
Unless you have very unusual requirements for software, most of it should install and run on Win7. DOS based programs won't, and there may be a few 32 and 64 bit compatibility hassles but it's worth a try. If your XP machine is otherwise functional you may can probably still use it for those tasks which do not need internet access. However, from what you've mentioned so far, it does look like it's getting close to the end of it's run.
You will also retain good standing within this forum 'cos the mere mention of XP is fast becoming an invitation for intense and pointed counseling.