If you want to keep your old machine, Ubuntu is a good choice for low memory machines.Windows & works well with 2 gigs of memory, I believe * likes a bit more. Windows 8 with update to 8.1 will bring back the things like the start menu and conventional desktop known in previous versions.
Open Office is a good office replacement,free too.
Windows XP is still safe to use. Just be responsible.
Use a web browser thats going to be updated, like Google Chrome or Firefox.
Set up a non administrator account for accessing the web(Standard user). Make sure your administrator account is password protected. That way software cannot be installed without your permissions. This should be done regardless of windows operating system you use. Malware needs your permission to be installed. Did ya ever get one of those toolbars or search engines you didn't bargain for? These come from places like Cnet and download .com that wrap other software with what you intend install. Be careful through the install prompts.
If possible, go directly to the software writers direct links for download. Freeware from repository sites often comes with extra gifts
But by all means, if continuing to use XP avoid the Internet Explorer browser. It is the biggest threat to your online presence.
I know most people have some type of Google account. Set up a free google drive
www.drive.google.com and store your important documents there as well.(Use a good password on your google account as well).These docs then are available across any mobile or desktop system you have.