I built a similar system a few months ago and I am very happy with it. Use your old Win XP OS. No need to buy Vista.
One thing I did was install a second Win XP OS on a separate partition. It's a dual boot system that boots into a work computer or a gaming computer. Because I am only using the second system as a gaming system, only, I have no need to have security software running, or basically any software running, in the background that eats up precious resources.
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