um, depending on hte age, the RAM is probably worthless. I'm assuming you have some basic knowledge regarding the innards of your PC... that said, you SHOULD be able to set the jumpers to slave, hoot it up to an empty IDE connector (preferably on the same chain as your current HDD), and boot. if you boot off a boot disk w/ FDISK on it, you can reformat it that way. It should show up as a D: drive, if you've just got a C: already, or the next available letter, otherwise. That's actually a really good idea. dunno what you're gonna do with 2 to 7 gigs of HDD, but have a ball w/ em.
mayhap check if the ram is compatible w/ your mobo and if you have a free slot... that box could use s'more ram! (the OS itself will eat all 256 you have now).