Well if you could do without KDE you'd free a lot of resourses. I'm likely running an identical computer (it's been used in a lot of schools and governent buildings, Dell Optiplex GX110 P3 886MHz, 128mb RAM) and I know that with KDE things run a lot slower then with IceWM, XFCE, FluxBox, and etc. All of these take a bit of extra work if you want to have some pretty common features, though... but you should give them a try.
If you must stick with KDE, get rid of all the effects, get rid of desktop and panel backgrounds, and turn off the KDE sound Daemon. You should notice a difference.