I just got my first time in on Windows XP yesterday, on a 1.6 GHz P4 Sony Vaio desktop system. The speed (lack of) was appalling. Just poking around, opening control panels, various software, etc. Very bad. Uh... that's after I removed some background applications from startup, and rebooted. And, I did note that performance improved somewhat when I turned off all the glitz visual features that make XP look different from Win2000 and Win98.
The useful speed of this 1.6 GHz machine was far lower than my 850 MHz PIII with Win2000. And, it's far lower than any Win98 system I've seen, running on PII or PIII 350-450 MHz.
I'm runing my XP Pro on a Dell 433 1.6 gHz with 512 megs RAM. It is by far the fastest machine I have ever used. I am thrilled with the zippy response to every keystroke and mouse click. The only thing slow I have found so far is sometimes waiting for FR to come up -- but I'm guessing6 that is more about FR than about XP or Dell.
Sounds like you had XP Pro. There's a reason for that. XP Pro is designed as a network client, not a standalone. The 'System' reserves 20% of resources for System processes. This reservation system drags the OS as all processes must be monitored in real time to preserve the allocated resources for System. This feature can easily be disabled to unleash the OS. I did it on the day I installed XP Pro.
Here's some tips for XP. The "Increase Broadband" tip on this page is used to speed up XP Pro's Desktop performance as well. By removing System reservation all processes are executed in real time, which is how they should be on a standalone. System reservation just makes network applications more stable. Unless you are running network applications you don't need it.