On my local hard drive C I have 22.0 GB Used and 52.4 GB free space.
Sounds like an 80Gb drive with 74.5Gb of usable space all in one partition.
You should use 512Mb of RAM or more for XP and you should be running anti-Trojan scans with AdAware SE, SpyBot SD & be using SpywareBlaster to protect your system.
It would be better to partition the drive in my experience. I have a 10Gb drive C: and place the My Documents and Email folders on the D: drive, the Music on the E: drive and use the F: drive for Archive material.
If you look at Kathy's Korner you may find tips on repairing System Restore, but the best safeguard is to have a drive image to restore to, hence the smaller C: drive recommendation.
So why the hanging? Too little RAM or a program fault? If you run the anti-Trojan scanners you'll soon see if there is a problem.
You could also try cleaning up the drive which might help.
If you run Disk-Cleanup first of all and then install and run CCLeaner you will already remove a lot of obsolete junk files.
Then, if you unhide hidden files and folders you can also delete all of the $NTUninstaller$ files and carefully remove their entries in Add-Remove programs.
Then remove the following:
The contents of the C:\WINDOWS\Downloaded Installations folder.
The contents of the C:\WINDOWS\SoftwareDistribution\Download , folder.
And the contents of the C:\WINDOWS\Temp folder.
To make some more room. then run chkdsk and defrag.
You might then consider using a Partition resizing program to shrink your 80Gb drive down to a reasonable size to make it easier to maintain and to image.