At some point, a system can't handle the gradual upgrades over the years, particularly if you use some heavy-duty software like CAD, rendering programs, or newer games.

1 GB of RAM is definitely too little. I recently had to upgrade mine to 24 GB. It's hard to find any with fewer than 8 out there. Check your motherboard documents and see how much RAM it can support, and get more. If you don't max it out, buy larger chips for fewer slots so you can max it out later without having to toss out old RAM (you probably already know most of this).

Don't know if your system would support an SSD. I ordered one with my new laptop, but have never actually installed one myself, and I'm not sure if they interchange transparently with regular hard drives. Might be some bios issues or chipset issues in older machines. I'd definitely do RAM upgrade first.

Windows 7 works really nice for me (I never used Windows 8, and am not planning an update to Win10 any time soon). Microsoft really isn't supporting WinXP any more.

Are you really talking 2.8 MHz? I think you typoed GHz.