Agree, your specs for your CPU don't look too bad, assuming your not into heavy spreadsheet number crunching or lots of video or games!
512 RAM is almost certainly a limiting factor and if you are using it all, Windows will start moving more information onto the hard drive and then back again, so really slowing you down.
Look at Task manager (Ctrl+Shift+Esc) , performance tab and see if all your or most of your 512 of Ram is being used. It almost certainly is, but it will confirm that RAM is an issue.
Moving to 1 Gig Ram is OK, but if your motherboard only has 2 memory slots, a further upgrade will mean trashing both your new and existing 512 sticks, so a new 1Gig stick might be better.
Check your Motherboard info. to see if it will take 1.5 gig memory, then you will have lots of RAM and if you need a further upgrade, you will only need to replace your old 512 stick with a second 1 gig stick.
If hard drive space is an issue as discussed in the previous posts, and is still limited after clean out of trash, temp files etc, you can keep your existing hard drive and add a second one (check your motherboard info.).
Nearly all PC's have capacity for 4 drives. (I assume your PC uses parallel connection hard drives not the newer serial (SATA) drives.
With a new drive, which is likely faster, you can move the swap files that Windows uses onto it, as well as using it for general file storage, so that you don't need to affect your Windows installation or move any installed programs.