Here's what I do to avoid thrashing. It has to do with Windows changing swap file size on-the-fly.
I set Windows Cache settings to TWICE the size of physical ram, in your case, 256 megs. Set Min and Max to the same number (256megs) and set your machine to "Network Server" Reboot and see if that helps. More ram will definitely help. I would say 256 is the minimum now-days.