|"in older times people ran computer with 1-2 mb of rams"|
They also ran DOS & had processors that only ran at 75MHz. Times have changed. As operating systems become more complex, they need more RAM & faster processors. As kuwese said, XP needs 512MB to perform reasonably well, but you're only showing 496MB. You probably have 512MB but 16MB is being used by the onboard video. If you were to upgrade to 1GB or more & add a real video card, you would see a huge improvement. You should be able to tweak some settings to make your system run better, but no amount of tweaks can make up for lack of RAM & weak onboard graphics.