I think you have answered your own question. Your PC is very old and I think that you would do better to buy or build a new one.
Here is a quick spec:
Pentium G620 £48+(CPU).
Gigabyte GA-H61M-B2-S3 £42+ (mobo).
4GB Corsair PC1066 £22+(RAM).
Cooler-master GX450W £27+ (PSU).
HD 6850 £100+ (Graphics).
Case of your choice,new optical drive and a hard-drive size your choice. I have added optical dive and hard-drive as yours will use a IDE connection and the new Mobo has only Sata ports on it. You could transfer Your XP operating system over but in my opinion this would be a good opportunity to upgrade to Windows 7.
This spec give scope to upgrade if you wish in the future.
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