[quote]is it possible to upgrade the processor[/quote] - No, afraid not.
[quote]whether i can upgrade the hard drive to something larger[/quote] yes, but it will have a limitation in the BIOS. Only way to be sure is to read the documentation.
[quote]and to which Windows OS i can upgrade to[/quote] - depends on the processor speed and amount of RAM - Win98SE is pretty good; win2k better.
You could upgrade the RAM.
But with laptops available from Dell for about £350 you might be better saving your money.