is right on the lower limit as far as WindowsXP is concerned, and no machine is going to break any speed barriers like that. Notching the installed RAM up to 512Mb is going to make a difference, certainly. The machine has two RAM slots, so you can put 256Mb in each one, or 512Mb in slot one - put the existing module in slot two.
Speed gains are impossible to forecast, but if your friend is only running MS Works, plus email and Internet Explorer I wouldn't expect anything too spectacular. Presumably the hard drive has been defragmented? Run disk cleanup too (before running the defragmenter), and see what happens.