Had you ever experienced opening a folder in Windows XP and it takes around 30 seconds to a minute (or even more) before you can actually see the files & folders in it? Mind you, I had experienced this even if my machine is sporting around 1GB of RAM.
As you had guessed, the culprit is Windows XP’s default settings. You see, Windows XP will try to automatically locate network drives, folders, and printers by default. This happens every time you open a folder in Windows XP. To avoid the lookups, go to My Computer. Click on Tools > Folder Options. In the Folder Options, click on the View tab and uncheck the option “Automatically search for network folders and printers.”
This should make your folder browsing a little bit faster (even if you just have 256MB of RAM).