I read this with some interest. I note that the Intel video is integrated, which means it shares RAM with the motherboard, and so your total RAM load may not be 1GB at this point. When you bought new RAM did you go a larger size, or stay with 512 MB sticks in each slot? If you're still at 1 GB, look at your BIOS to see how much RAM you are sharing. (A lot of the later Intel integrated systems are adjustable - and if someone changed system resolution in Windows, this may have dynamically affected the RAM share.)
Windows XP and PCLinuxOS will both run better with 2GB or 4GB of RAM, but upgrading quickly becomes a matter of cost-effectiveness on older hardware. Naturally, you'll want to weigh your options before you spend your money.
Good luck, Ramchu. I know how frustrating it can be to try to get stuff to run on older hardware - I've been doing it a lot lately.
I see I was just an augenblick too late with my suggestions. It appears you may have arrived at the same conclusions as I did, though. Glad to see you got it working.