wait, before throwing the OS to the bin there must be something you're doing wrong.

XP comes with a hell of a lot of hardware drivers, you normally don't have to install third-party drivers at all. It should detect and setup your hardware quasi completely during the install.
Another thing too, with WinXP it is recommended to stick with Microsoft's drivers as much as possible EVEN if you've got third party drivers for your hardware. For example if Microsoft has got a driver for your nVidia card and you have a nVidia CD with a driver on it, it is recommended to keep Microsoft's driver for consistency reasons, and even more you SHOULD keep it especially if everything works well with your hardware.
The network setup is a bit different indeed. Get yer ass on IRC, I'm gonna hotline you up with this one.
And yeah, if you've got only 2 gigas to spare to the system, I understand it's a bit short

Don't you have other partitions aside of this one ? If not really you should consider buy a larger HDD... they're not very expensive nowadays.