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OK, your system is really a borderline system (and I think below) to be capable enough for Win7
You have a HT Processor, not a real dual core
memory is DDR2
HDD is early SATA (PATA in wolf's clothing)
No discrete video card.
Somewhat slower chipset.
Coming up on 6th birthday in Feb 2011
Not worth upgrading to Win7 IMO and if it was, Win7 is not going to give you much more (while running slower). A clean install of XP or even creating a new user profile, defrag. and Malwarebytes sweep might do more for that machine for free than dropping $100+ hardware into that rig, only to get mediocre performance.
I wouldn't try to upgrade. Don't get me wrong - this is a decent XP computer. If you were one of my work clients and asked me to spend $400 on it to get to W7 I would have you sign an "Against Geek Advise" consent form.
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