soyo dragon + Mobo
AMD 1700+ (1.47 ghz)
256 mb crucial ddr
XP pro and it rocks. I have a ME machine (I know), a 2000 machine, and a XP machine with the above spec and I have no problems with drivers or stability. All of the subtle differences from 2000 make it a much better total package.
And the degradation is indeed due to one choking up the system with installs and crap/not defragging hard drives etc. The OS does not degrade over time.