Anyway..
Pentium 4 is ancient compared to the CPUs of today. I run a Core2 Duo @ 3Ghz (its really a 2.13Ghz chip) and its very nice. My GPU is the most limiting factor in my system but its probably fine for emulation anyway, I don't really play with modern console stuff though.
If you are on a budget than an AMD chip is gonna be pretty good for you. But you'll have to go with whatever people recommend for that as I haven't had AMD in a long time.
Core2 Duo prices have come down a little though, it all depends on what currency you are buying in, and where you buy from though. Online stores are usually always cheaper, but Brick and Mortar stores (meaning a local retail chain) usually have some pretty good deal on prebuilt systems in the sub $1000 USD range.
My brother has a Core i7, and a Geforce GTX275.. I wish I had one of those setups.
As far as your Virtual Memory Low thing, that probably has to do with filling up your hard drive and not leaving much space for the SWAP file to expand, hence why a fresh install of Windows (assuming you formatted the drive and it has more free space than before) will get rid of those errors.
As a stop gap you could simply buy an inexpensive 500GB drive or something. They are usually pretty cheap these days.