Don't bother with XP back on that machine. That's likely why it was so slow. I think winXP uses at least 64 megs of ram to load up on boot. If you can load windows 98se on it do so. Get a win 98 startup disk and load the OS, that is the OS that probably came with the machine and iw probably a much better match.
Go ahead and load the RAM after you get the OS on it that way you'll know what the problem is if the RAM doesn't initialize.
Don't plan on running very many tracks, maybe ten 16 bit max but also leave plug ins alone.
Use the 120 gig for a dedicated audio drive and use the current drive for programs only for maximum performance.