512MB is just fine for XP. DO NOT UPGRADE this machine.
Why? Here I see Pentium 4 machines being given freely away on freecycle and other such lists.
DO NOT TRY IT. Use till it fails. In fact even opening that case can lead you into a well known tarpit. Smile and say that its a nice machine and do nothing to it.
I have a young friend who just inherited a Pentium 3 of unknown manufacture. She checked My Computer >Properties and this showed no manufacturer and 512 RAM. She inherited it with Microsoft Office installed, genuine XP, etc. so she would like to use it if she can.
I believe she needs PC133 SDRAM to get more RAM in that old box. My question - I have some PC2-5300U 1G sticks that she can have. I don't think these will fit, but without looking at the computer I have no idea.