This is only my personal opinion, but LFS is best with at least a 2GB processor, 512MB of RAM and 128MB video card. I know it can be run successfully on less able hardware, but you will find it performs much better with an equal or (preferably) higher spec than I have posted here.
I ran a very similar spec as you have for a long time, and was extremely happy when I upgraded my hardware. My PBs tumbled overnight with every car/track combo.