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I won't deny 256MB is on the low side, but it won't cause a healthy system to unravel. How old is the XP install? Old installs without maintenance will have a real horror show of a registry which eventually hurts performance and stability.
Do you have any registry cleanup utilities? JV Powertools does a good job. Install the eval version, safe boot, let it fix what it can and then use NTRegOpt to compact what remains. Can't guarantee miracles but if it helps, great. If not it was cheap (free).
It might help to post a hijackthis report so we know more about what's taking up those MB/MHz.
Whatever is going on, formatting isn't necessary. Even if you decide a new install is necessary you can do that in your existing partition without affecting your music files. The worst case is that you have to reinstall applications and spend a day reorganizing.
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There are a vast number of people who are uninformed and heavily propagandized, but fundamentally decent. The propaganda that inundates them is effective when unchallenged, but much of it goes only skin deep. If they can be brought to raise questions and apply their decent instincts and basic intelligence, many people quickly escape the confines of the doctrinal system and are willing to do something to help others who are really suffering and oppressed." -Manufacturing Consent: Noam Chomsky and the Media, p. 195
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