I think you're confusing the terminology. 256mb of RAM is the memory, 34gb is the hard drive space, and virtual memory is when XP runs out of RAM and has to use the hard drive for extra memory.
256mb is very low to run XP, so you might want to increase this by buying a new RAM stick. 512mb would be a reasonable ammount, and 1gb would be preferable.
To increase the virtual memory settings, follow the instructions at
http://www.microsoft.com/resources/d....mspx?mfr=true and set the initial and maximum sizes to 1024mb, then reboot.