Hey I have Windows XP Pro installed on my sisters computer which has 128mb of ram, 32 meg graphics card, and a Pentium II 350mhz MMX and it works as well as windows ME did. It is faster actually. Maybe this is just a lucky caser but a friend of mine, believe it or not ran windows XP as a server on a 133mhz Pentium and it booted up in a whopping 50 seconds! So I think it depends. 128 gets it running fine on my sis computer...fine given how old it is.
JAN