Varmint is right, 1.8GHz (single processor) and 512MB is the barest minimum for running SK at the lowest settings. Virtual memory paging is basically extending the working RAM onto the hard disk, but disk access is orders of magnitude slower than physical RAM. Therefore, if SK uses more memory than is physically available, you are guaranteed to run into insane lag and other problems- even moreso if your disk space is low. I would say it's time to invest in a new computer- even the lowest end machines these days come with 2GB of RAM, usually 4 and at least 2GHz speed (although that is less of an issue)

If you can't buy a new computer, I assume you are running XP (those specs can't handle Win7). There are a number of things you can do to trim your system overhead- BlackViper's Windows configurations has some advice on how to eliminate unnecessary services. You can also do a disk defrag, and clean up unused/unnecessary files, and lastly make sure you don't have any malware. Antivirus is unfortunately one of the biggest background system hogs, but it can't be helped- use something simple and free like AVG (Avast). Finally, don't run anything else while you run SK (but you're probably already doing that).