I had a PC with similar specs., and was going to use it in my cabinet. I recently upgraded, however, to a AMD Athlon powerhouse, with a whopping 512 megs. of RAM.

I'd try MAME .7X, and run something like MAMEWAH or some other LITE front end.
And stick with Windows 98. That's what my upgraded PC is running.

Why 98?
Stable
Compact
Fast
Compatible (with all but the newest games)
Low System Requirements
I Already Had A Licensed Copy
