win xp should be fine on 1.6ghz... hell, my new interweb pc is a first gen P4 1.5ghz, with 512mb RDram, and 0rpm HDD(when I got it, it didn't spin)
more ram+new HDD+ CLEAN/striped down install of xp AKA don't use a OEM disk(dell, hp, etc)
your not looking hard enough on ebay... I'v found 256mb sticks for under $5...
http://cgi.ebay.com/512MB-256MBx2-DD...item563bedeb5d
what exact laptop is it??
they do make 512mb sticks, but IDK if the laptop will support it...
http://cgi.ebay.com/Dell-Inspiron-86...item45f667423f
I'll pay the shipping if you send it to me...