Optimize performance on 1gb machine?

I'm running Parallels Desktop on a 1gb machine, and curious as to what optimal settings would be for a single Windows XP guest OS configuration?

I currently have the reserved memory set to max (784), and the VM set to 684, and I cannot tell if its constantly swapping on the HD, or its just very slow. It seems to run fine until there is disk activity. For instance, windows updates take 100x it would on the machine in a normal mode.

 

Oh I almost forgot, its running on Ubuntu 8.04 32bit as primary OS.