Second vote for increasing system RAM... Of course I work for a company that makes memory modules so my opinion is slightly skewed
. In all seriousness, your best first step is to max out the memory (if money allows). This will enable you to minimize the disk thrashing that will occur as your CPU tries to access the swap file on your hard drive (virtual memory). If your uses are only for word processing, surfing and MP3 files, then I would only upgrade the hard drive if it were to increase the size
, not the speed. In other words, I rate storage capacity higher than rotational speed for the types of usage you refer to. You're always going to wish you have more space on your drive; you probably aren't going to notice that your multi-page, graphics intense, word processing document got saved 1 second faster. Just MHO.
(edit: Another thing I just thought of when looking at your system specs... Turn off all of the "eye candy" that Windows XP insists on using if it's a default install. Search the net for suggestions on how to minimize Windows usage of CPU cycles. Check your Startup folder to see if there's processes that are being launched that you rarely use. Tune your operating system to run lean. Best part of this advice... doing all of that is FREE!)