SP1 is service pack number 1 from microsoft, it fixes some errors that occur in windows. I would not reccomend putting windows xp on anything below a 400Mhz with 256mb of ram. on anything with 128 mb of ram i wouldn't reccomend anything below an 800Mhz.

The past horror stories of xp are just that, in the past. 2000 is still the most stable MS operating system yes, but XP is right behind it and compatability isn't much of an issue anymore. Plus Windows XP does run programs faster if your system is fast enough to use it.

IE: My XP1900 would get almost double the framerate in games and took almost a quarter of the time to load programs in XP than it did in 2000.