If you have much less than 2GB of RAM, your computer will use the swap file to hold information when it needs more memory space like when starting a new application. If the swap file is on the same disk as the application (i.e. C), that disk has to work hard to write old data to swap and read new data from the application files.
In Windows XP click Start then right-click My Computer and select Properties
This should open the System Properties window, select the Advanced tab then click on Settings in Performance
This should open the Performance Options window, select the Advanced tab then click on Change in Virtual Memory
This should open the Virtual Memory window showing a list of drives (C and D in your case). Down the bottom of the window you will see a Recommended Size. Click on D and then select Custom size and enter the recommended size into the Initial size field. Then click OK to close the Virtual Memory window then OK to close Performance Options. At this point you can reboot.
Repeat the above operations to get back to the Virtual Memory window. This time select C and set the Maximum size field to 0MB.
To reclaim extra space on your C drive it is worth clicking Start, All Programs, Accessories, System Tools, Disk Cleanup
This will scan the disks then open the Disk Cleanup window. Other than "Compress old files" it may be worth selecting most options. Personally, I never use System Restore so I go to the More options tab and click Clean up... in System Restore then click Yes in the pop-up window to delete all but the most recent restore point. Finally click OK in the Disk Cleanup window.