Windows Vista and 7 support ReadyBoost which will use a fast USB drive as a cache before hitting the page file. This can help increase responsiveness of paging operations because the flash drive is much faster at 4K random read/writes than the page file on the HDD is.
Better yet, get a SSD drive. A pagefile on an SSD is really fast and will improving paging operation speeds fairly significantly, but is in no way a replacement for more RAM.
BTW, have you attempted to install larger RAM than it the motherboard suggests that it can use? It's possible that if you upgrade to the latest BIOS revision that you might be able to use larger chips, such as 2x2GB or 4x1GB (not sure how many RAM slots you have). It shouldn't hurt to at least try a larger chip if you have one available.
Also, you should reduce the RAM allocation to your virtual machine to as little as is needed to run the VM. An XP guest can run in as little as 256MB or 384MB of RAM depending on what you're using it for.