512 is definetely the least you should have, especially if you are running XP and playing Flight Sims
as far as the hard-drive goes we cant give you much advice without a budget....large hard drives are getting cheap, but they often lack the things that make a hard drive fast...rotational speed and cache(or buffer) size are important in how fast your hard drive is...theres no excuse for going below a 7200rpm hard drive nowadays, unless its just huge, and your access times arent important to you...an 8mb cache should do pretty well, 16mb is out there and faster...if for some reason you have Serial ATA ports on your motherboard, which i somewhat doubt you do, you could get one of those instead of the standard IDE hard drives...if you wanted to get really crazy you get spend some extra money and get a controller card for either a Serial ATA or SCSI hard drive...SCSI is sweet, but its expensive stuff..but can you say 15000 rpms?
but without a budget, the sky is the limit..so tell us how far your wallet stretches