In theory...yes. In the real world XP and XP Pro function best with 2GB. And forget 4GB, XP will never see it.
How many useless background programs are running? If you have more than 28-32 background processes running, that's too many. The only things you need running are the processes that keep the system alive and the program you are using at the time.
Have optimized virtual memory usage? Have you deleted all temporary files and folders? Empty the pre-fetch folder and delete it. It will rebuild itself on the first boot. After that, turn it off. Turn off the indexing service, turn off the update service, and the performance logs and alerts. Turn off the System Help and System Restore services. Each of these programs is bogging down your system. And with one GB of ram you need to squeeze every byte of performance out of what you do have.
The XP defrag program is about useless and it will never defrag the Master File Table. O&O is among the best defrag tools available.