iLemming with an Intel Question

Please don't laugh (too much).  I need to help upgrade my aunts computer and she won't have a Mac.  Doesn't want to learn a new anything.  Her present machine is 133MHZ, 16MB RAM (72 pin SIMM) no USB, running Win95.  She can't spend more than $200.00(US).  I haven't used an X86 since Windows 3.1 but I'm the IT.

Question:

What do we want to be looking for?
Thank you

256mb is fine for WinXP.  Just turn off some of the unused services and it'll run even better.

BTW, XP is better than 2k.  Especially for first time users or people not very good with them.  If you didn't already know it, WinXP is an updated version of 2k.