i have WindowsXP on 2 older machines ... Cyrix 6x86 200mx and a Intel Pentium2 300Mhz - both run just as fast as it does on my everyday use system. Of course if you wants extreme resolutions and all the special effects that accompany it you'll want a good gfx card too.
As for Ram needs, i find the MORE Ram you give XP the slower it runs.
My P2-300 only has 128Mb Ram and everything runs quite smoothly & quickly, this machine has 1Gb of Ram and every so often i have to reboot because it starts clogging up and the desktop stops refreshing properly.
most people who say anything otherwise quite frankly are people who don't even know what a low spec PC is ... they think that anything under 800Mhz is something anceint and not used anymore.
Perhaps my P2 can't push Unreal2 graphics or anything like that, but it run Black&White - Quake3 - JK2 etc... at a decent enough speed.