|It would help to know the make/model of the motherboard or at least the chipset the board is based on & also which video card you have. Based on the CPU & RAM, your system is already bottlenecked.|
For one thing, the Pentium D is a poorly designed CPU & is already crippled by it's netburst architecture. To help overcome the inefficiency of the CPU, the RAM's "real clock" speed should be be higher than the CPU's "real clock" speed. Right now, both are running at 200MHz, so it's a 1:1 ratio. For optimal performance, the ratio should be 3:4 with the CPU at 200MHz & RAM at 266MHz. It's not gonna happen with that setup though.
You also don't have enough RAM. 512MB isn't enough these days. You should have at least twice that much...more would be even better. And you should have a discrete video card, not onboard graphics that rely on the system RAM.
As for 32-bit vs 64-bit...XP x64 didn't have the driver support & Vista was never widely accepted in either the 32-bit or 64-bit form. Windows 7 64-bit is very popular though.