Try ro use 501, and install only XviD 0.92 or 1.02 and enable support for generic MPEG4. Seen it working excelent on slow computers.
Also FFDshow can handle smoothly files on that configuration but with a poor quality.
Sorry to ask, but in my country you can't buy any more so slow computers. P3@750-800 MHz is the slowest at around 40-50 $. Are you sure you can't find something better ?
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