Hmm yeah, XP can potentially use a lot of RAM. I was at around 600MB before I took steps...
Here is a quick little guide to reduce Windows greedy RAM grabbing hands, gather 'round.
First, disabling unwanted and un-needed services, I'm sorry but I don't have a link to one of the sites I've used in the past. You can just google "disable services" or something like that, too see what services you don't need.
Second, disable start-up programs, most of us have stuff that uses a lot of memory starting in the background, again disable what is not necesarry.
Third, a registry clean might do the trick, not sure if it helps lowering RAM usage but it speeds up the computer.
Last, download freeware such as RAMBooster 2.0 or Free RAM XP to free up RAM if you still are using much.
Before I took these steps I used 600+ megs of RAM but now I'm down to 500 (thats including Opera and Trillian which uses around 40 megs right now together). Big difference that
**EDIT: you might wanna download Rocketdock instead of the dock you are currently using, I have lotsa buttons and it uses half the memory of what ObjectDock is.**