You need to upgrade to Windows 7 64bit. Especially if you upgrade your RAM, as you can only access some 3.2gb on a 32bit system. And even if you have access to 64bit XP its not really worth it anymore, cause XP is no longer supported by Microsoft, nor most newer games properly and Win7 is basically the second coming of XP & sliced bread at running games and apps...
Or if you wanna do a completely new system, there are builder kits with the new Intel Sandy Bridge or AMD CPUs and all the components you need to get up and running, ~sans a monitor, GPU and OS for $250~$400 all the time through Newegg and TigerDirect. They are a mid-range starter PC, based on the best parts out there, and will run XIV and other games better than what you are now.