Wow. This seems so similar to my case.
I have an old acer veriton 7200D with a Pentium 4 @1.6GHz. It had a creepy SiS 305 but I added a Radeon 7500LE and 1GB of ram.
For no damn reason though, it can only see 640MB... so as you could understand my choices are quite limited.
Tired of XP (which became a burden after 4 years since last format) I tried manjaro linux with LXQt, much snappier than the already lightweight (but GTK-bound) Xfce.
Anyway even though I got Office working with crossover (I desperately need Access).. I somewhat didn't enjoy the overall thingy. I mean, I had already used console a heap of times by then.. and when power went off btrfs corrupted..
So I tried Vista home basic.. which aside of stupid myths about vista's sluggishness performed well.
But I still felt it wasn't optimal.. So.. surprise surprise, I reinstalled XP.
And man, I can't believe it only uses 130MB of RAM (manjaro was 200MB and Vista 290MB) with nothing opened and with all the updates (were 110 with only SP2) edit: you can check performance tuning here
edit2: Windows Thin PC in a vm with windows basic theme and all effects disabled managed to get down to 240MB
At the moment I only installed media player classic, thunderbird and firefox.
Gosh, if it's doable. At least now I don't still feel my phone (and it's tiny screen) better than a full sized computer.
When I have to install drivers, I just manually unpack installers and give required files to windows device manager (so no additional burdensome service is installed)
I have no AV, but if I really were to use one I would avoid Avast and Bitdefender all day. Both of them are quite stupid with false positives.
EDIT: Ok, so the Radeon died. Hence I had to revive the Silicon Integrated crap. (expectedly OEM has just outdated drivers).
Very funnily I get artifacted hardware YUV conversion, and video driver crashes when I start google earth.
Now I wonder if it could have something with the fact they magically enabled DirectX8 in latest driver. Or perhaps I should just update BIOS.