1. "When I go into My Computer>Properties>Performance, it reads System Resources 65%. What exactly does that mean?"

Read the MEMORY articles at http://www.aumha.org/articles.htm

2. "Is 65% good or bad?"

It's usually enough to run most programs. It's a little low for a bootup, but today, people do odd things to this old OS such as a firewall (If you think you need one, please detail the EXPLOIT for this OS!), and much more.

The Optimizing Windows section may help.

Bob