I'm guessing a big part of the problem is the fact that you're only running at 1024x768. I'd imagine SL's windowed mode will default to a size far larger than that. Even if you manually shrink the window, it might not stay shrunk the next time you restart the program. Full screen mode is probably your safest bet, with a resolution that small.
I know this probably isn't what you're going to want to hear, Dog, but frankly you're lucky SL runs on your system at all. Your hardware is ancient. To put it simply, you've got just about the absolute bare minimum specs just to make SL work. You don't have anywhere near what you need to make it actually work well.
Your GeForce 4 is well over 6 years out of date. They stopped updating drivers for it two years ago.
With just 512MB of RAM, I can only imagine how slowly things must go for you. Windows XP itself needs around 128MB just to run stably. That means you've only got 384 available for everything else. Factor in any background applications you're running, like anti-virus, internet security, etc., and it's even less. You've got maybe 1/3 of the available gigabyte or so of memory that SL needs to run at any semblance of normal speed. (That's assuming DDR2, by the way. If you've just got DDR, then you're in even worse shape.)
You didn't mention what your CPU is, but judging by the age of your other listed hardware, I'm assuming it's probably a Pentium III or Pentium IV, or whatever the AMD equivalents of those were at the time. You can get SL to run decently on that, but only if you've got a ton of RAM, a suitable video card, and virtually nothing else running along side it. For good performance you want at least a Core2.
In computer years, what you're doing is like trying to drive a Model T on a modern race track. Sure, it'll go, but it's certainly not going to keep up with the other cars, and you're likely to crash and burn any time the track conditions are anything but pristine.
If I were you, I'd strongly consider getting a new computer. Even a $200-400 modern PC would run circles around what you've got now.
If that's too much for you, then at the very least, I'd suggest you scrape together $30-90 for a new graphics card. Again judging by the age of your listed components, your video card interface is either AGP or PCI. If it's AGP, then anything on this list should work for you:
http://www.newegg.com/Product/ProductList.aspx?Submit=ENE&N=40000048&Description=agp%20graphics%20card&name=Desktop%20Graphics%20%2f%20Video%20Cards . If it's PCI, then you want this list:
http://www.newegg.com/Product/ProductList.aspx?Submit=ENE&N=40000048%201069609642&Description=pci%20graphics%20card&name=PCI . None of that stuff would be considered good by today's standards, just so you know, but almost all of it will be better than what you've got now.
EDITED TO ADD: I just took a look at the Window Size options in Preferences. It appears there are some defaults for small screens. There are a couple of TV-sized modes: 720x480 and 768x576. If you select one of those as your default, it might solve your problem. Give it a whirl.