I'd also advise not to use Win7 on that configuration.
Simply lacks the juice for win7
Although xp is pretty outdated now.
As TheVoy suggested put more RAM in it and see about hard drive, but I'm not sure how viable an option this is (depends how old an laptop is)
Most netbooks are similar spec. a 2Gb memory module is around £20 (sadly, you'll have to throw away the original module). For SSDs, I will only use Crucial m4 at the moment, so a 64Gb will be around £50, 128Gb about £90.
Depends on the make, my netbook is a Advent 4214 with Atom N270 and as far as i can find out, it carnt take any more than 1GB of memory, so that may not be an option available for the OP.
Try it, I seem to remember seeing somewhere that this Advent Milano would only take 1GB. It's running 2GB quite happily.
Think i will

One memory supplier site, i looked at, scanned my netbook, to see what it was, it correctly identified it, then put up manu's spec saying 1GB max, but then was quite willing to flog me a 2GB upgrade for it......