Definitely download a CPU temperature monitor to confirm.
As far as your RAM, you should be running 2 GB at LEAST. I assume you're running XP 32bit so you can put up to 4 GB of RAM, although the operating system will only make 3.25 available to you. The more RAM, the better.
Also, if you do upgrade your RAM, go with DDR2 (double data rate / dual channel) and get a pair of them. Doing this will let them run in dual channel mode and you'll have a lot better performance. I'd say you should go ahead and get 2 sticks of 1GB (preferably Kingston) DDR2 RAM with no higher than a CAS latency of 5. Whatever you do, just make sure both sticks are exactly the same and are not "rebuilt". Then you can add those two sticks to your existing 1 (or pair of 2 512 sticks, provided you have 4 slots)
As far as your graphics card, you're using an onboard graphics card and should seriously consider a better one. You can find add-in PCI-E graphics cards at any computer retail store. Your best bet in this department is either Nvidia or ATI. Just find something with at least 256MB, preferably 512MB. (you can even get 1GB, but it won't be necessary. I can play Crysis on high settings with an Nvidia 9600GT at 512MB)
One thing to keep in mind is what kind of ports will be on the card itself. If you're connecting to your monitor with a standard VGA connector (blue D connector), then you'll need one of those on the card. If you're connecting with DVI (white connector) then you'll need one of those, respectively. If you use dual monitors, you'll obviously need a card with dual ports of whatever you use to connect the monitors.
Your processor is decent at 3 GHZ, so I wouldn't worry too much about that because they're more expensive to upgrade. I run a dual core and it's pretty speedy, but it's pricey. I'd upgrade the other two items before thinking about upgrading your processor, as you may find that it's more than sufficient for what you want to do.
So in recap, upgrades to look into:
RAM
- (2) DDR2 1GB Kingston sticks at 400mhz, CAS latency 5 (or lower)
VIDEO
- (1) PCI-E Nvidia or ATI graphics card at 256MB or 512MB
If you do those two upgrades, you should be able to play any game currently on the PC market.
But before you even think of upgrading, you need to track down the exact cause of the overheating, because you may end up having to replace something more important than an upgrade.