How bad is this server?

Here is what we have at work running MSSQL 7.0. Tell me if this thing is dragging it's feet like a dying buffalo or if it is sufficient:

Spec Sheet:

So this poor bastard only has 512mb of physical RAM. However, if you open up the task manager perfomance tab after the SQL Service has been running for a few days without a reboot, it will be using 600-800Mb of memory. Obviously it is dipping into Virtual Memory, I can't see this as being a good way to run this thing. That has to kill the performance. It can take up to 1GB max. I'm thinking we should be buying this really soon, yes?

Is the processor sufficient or shoud we just dump the whole motherboard for something newer? It's running (3) 9gb SCSI HDD's in a RAID configuration if that matters.

 

Another question. Lets say I want to upgrade this dying cow to something a little more modern. Obviously, there is nothing I can just plug into a Pentium II slot to make it something of this century, so I assume I'd need to get a new motherboard and processor. Do I NEED to use a server board and high-end Xeon processors for this thing? Would a normal AMD Athalon 64 or Pentium 4 suffice as long as the Mobo plays nice with the RAID controller card? Although I suspect a celeron would run better than this thing the way it is right now....

 

Alright, i put together some componets to build a new one. Tell me if this sounds decent and it's all less than $1,000

Mid-Tower case with 300 watt power supply & fans
MSI motherboard with onboard NIC, video, etc (ATX form factor)
Pentium 4 2.6Ghz w/800mhz FSB
1gb RAM (DDR400)
RAID controller Card for 3 SATA drives
(3) 80gb 7200rpm SATA drives
CDR and floppy drives

 

Looks fine to me for a low-end SQL Server, but that all depends on the volume of traffic the SQL sees... What kind of queries does it generate? Cranking out data center type usage, or just casual queries from a webpage? The kindof power needed for a SQL Server depends entirely upon what it's doing: simple queries don't require a whole lot from a low-volume web server, for example; a SQL Server running complex stored procedures behind a C/S application in-house (for example, with a distribution center requiring real-time inventory level management) requires considerably more power to keep the application running...