I say put Linux on it.
There is nothing inadequate about your hardware. It is perfectly capable of running a modern OS. And you don't need to give up your old XP installation.
I do not suggest keeping Windows XP. Windows XP is a 13 years old OS, it has been out of support for a month or so. It makes no sense to install linux for its virus-proof while having the XP for normal using.
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To the op:
I do not suggest you keep using Windows XP, it is deprecated and may become extremely unsafe as Microsoft stopped offering updates.
I tried my best to answer it with the data you gave but it is a bit confusing:
You can run Windows 7 32-bits, you meet all requirements.
About Windows 7 64-bits: You mentioned your CPU is a 'pentium-celeron', unfortunately there isn't such a processor (or I could not find it), there are pentiums and there are celerons, it would be the best if you could give its unique model name as there are many Celerons and Pentiums that have 2.8 Ghz clock frequency. Because of that I can not guarantee you can run Windows 7 64-bits.
In the case that your processor has the capacity to run it, you are on the borderline of the ram necessity; the 64-bits version needs at least 2 GB to run(buffer-size is bigger, thus needs more ram to do just as much in terms of quantity of operations.) Because of that, I suggest you start thinking in investing some money in more ram as newer processors are all coming with 64-bits architecture and may not work decently with low ram amounts.
About buying a new GPU: The only ways that an external GPU can help in terms of data requirements are a) video decoding(almost sure you won't use this), b) Having its own memory thus not using the systems(still preferable to buy a independent ram chip as you can not 'lend' memory from the GPU to the CPU), c) Using CUDA to do parallel processing for pen-testing or computational mathematics(doubtfully you are going to use this too).
Does that means you should not get a GPU? Not really. If you want to game or use of programs that can be GPU-rendered(AutoCAD, 3D CAD Solidworks or any of the sort) then buy it, but do not forget that you should also expand your ram if you plan in hanging around Windows OSes and other 'mainstream' computer appliances. If you want to save money, then you can try Linux just like T-Rexx said, most linux distros are extremely low-weight and can run even on really old machines.
If you have any questions about anything that I said here, please feel free to pm me or post here!
