That pc should still be able to run LFS just fine. I had a XP2000+ with radeon 9500 en 750 MB ram and that was ok. I replaced it because it was pretty old, but it still ran Windows XP and LFS fine. But it didn't with other games. Funny thing is I discovered I did not like those other games and now still only play LFS with my new PC.
So an XP3200+, Radeon 9800 should not be a problem with full grids if you have the right display settings. I would just keep it, you won't get a lot of money from it and it still is ok as internet pc or (file)server and it even runs older games (and LFS). I've kept mine (although i've given away parts of it, so it's not that usable anymore
)