XP runs fine on my athlon XP 1800+, 512 DDR 2700, 30 GB maxtor hard drive.....I also have mandrake 9.2 on an 8 gig hard drive which also runs fine.......I play UT2K4 demo on it
If you have the 2.0 GHz computer on a network and the Dell isn't, or if you have a lot of shit on the 2.0 GHz that isnt on the Dell, then that might be the reason for it running all shitty. I think you need 512MB of memory to really run XP; 256 is OK while 128 is pure shit.
I think that 98se is inherantly (sp?) a lot faster than XP, so you should just leave the Dell as it is. I don't see that much of an imporvement between 98se and XP; they just put on some eye candy. The biggest thing XP has over 98se (i can't be sure but I am pretty sure that this is true) is that 98se (at least, at first) did not support USB.