Hmmm.... it should runs fine with that specification. I have P2 - 400MHZ with 512 RAM and it runs smooth. Give it a try to Fluxbox
. They are pretty light window managers and runs amazinly fast
. They don't have the eye candy of Gnome/KDE but are very useful and effective. Worth a shot
P.S: check for the services you are running at the background as david_ross suggested, it might help.