I just wouldn't use this system at all. Its too dated and the results would be lacking even if you got it all going. You already see the problem(part of it), the video card, finding a AGP capable one and you may at that cost. If you want to play, then consider anything you do in the long run would have best done on a PCI-e type based system. Offhand, having HDTV media can be done but overall if not pushed will work. However, I would think this is best with Vista or Win7 OS, if you use XP that may cause some hindrance. You may tweek XP just as much as finding the h/w. Also, if the HD content is provided by cable/sat you may have issues as well under XP as to the setup., etc.. In other words its not going to be as straight-forward as expected under XP. See the link below:
I have a old Dell Dimension 4600 desktop sitting in storage. I was thinking of making use of it for playing HD movies on my HDTV. So i opened it up and it has currently 512mb RAM and on board Video.