Probably re-install XP would be your best choice.
However, you can probably run Windows 7 on it, if you must. It would be best to have at least 1GB of RAM in the machine. (The maximum is 2GB. That would cost about $100 at www.crucial.com
. It's a little expensive, relatively, because it's DDR. Old RAM types cost more than current stuff of the same capacity.) There are Windows 7 drivers
for your onboard graphics (Intel 945G chipset). If you wanted to add a graphics card, you'd be limited to PCI. (PCI Express is the current standard. It's completely different from PCI, and not compatible.) There are PCI graphics cards that fully support Windows 7, like those with the nVidia 8400 chips or the ATI Radeon 4350.
I doubt that you'd see any speedup with Windows 7, and it might be slower than XP on hardware like that. XP is still a very usable OS.
In my opinion, it makes little sense to spend much cash on a system that old. Continuing to use it is fine, but rather than hang upgrades on it, save the money for more up-to-date hardware.