SP3, will not be using extra memory/system resources.
Almost everything is about fixing problems/adding more security.
If the system is running XP with SP2 fine it also will do so with XP SP3.
Since that system has being in use for a long time already, I strongly suggest to do a clean install.
It would not surprise me at all if it runs slower than needed because there are a lot of things on it that are not needed (any more).
- Disconnect from the Internet (pull out the cable)
- Install windows (format the drive ofcourse)
- Install ALL drivers for your system
- Install avast
- Connect to the Internet
- Install all updates security/drivers (especially the security updates/service pack)
- Install the applications you are normally using
- Make settings/configurations changes is you want/need
- Create a image of that drive
That last one will safe you a lot of time in case you need to/want to reinstall windows again.