Did you format the drive prior to installing Windows?
With so little space left (1gb) I'd start over. Do a format like MrChad says and then a clean install.
I would even suggest windows 2000 on such machine. If it only has 6GB of space I would imagine the ram and cpu must be rather low as well.
Hey guys, thanks so much for your input. I want to address each of your comments. I think I resolved this issue late last night...and wow, it's really freakin wierd!
I initially tried to install a 'performance' edition of XP. This is because of the low HDD space. I used it previously and it saved a lot of room, but I had to find drivers for this old thing and the effort was not worth repeating. When trying to install the performance edition, the machine would hang up before the install was complete. So I acquired a different copy that was the full edition with SP3 and it installed fine. I was sick and tired of waiting for the formats, so no I did not re-format with the current install. That is a good question, because now that I think about it, it's the likely reason I had 2 windows folders.
I was very tempted to either start over or just throw the machine in the trash, as I got 4 decent computers in the household. I'm one who doesn't like to throw away anything electronic since it will be in some landfill for a thousand years or so...so decided to troubleshoot by finding what had changed on my comp that added an entire GB of used space.
As far as running 2000, I never really had good luck with that system, even though I'm sure it would be more appropriate for this machine. It actually came with 98, but I upgraded it to XP years ago when it still belonged to my parents. For anyone interested, the specs are a PII running at 397MHz, and I upgraded the RAM to the most the machine can hold which is 288MB (there is a 32MB chip soldered in). There is a 6GB HHD, an optical drive and floppy drive (LOL). It's an IBM Thinkpad and it's built like a little tank. So yeah the specs are pretty freakin low...and what's funny is this machine cost well over 2 grand back in the day!
Now about the issue...
I decided to search the windows folder for the largest files and folders. After much searching, I came across a folder labeled 'Internet logs'. I am not very familiar with this kind of stuff so I did an internet search and found that this folder has to do with my Zone Alarm firewall. There was a monstrous file within this folder, well over 800MB!!! What is even stranger is that this turned out to be a notepad text file!!! The file was named 'TVdebug' or something like that. I found the same file on my business desktop and it was only about 4MB. So apparantly something went wrong during the install of the Zone Alarm firewall and the machine created some 800+ MB text file! What is rather amusing about this is that I recall the machine just sitting there unused but turned on...then suddenly the HDD 'crackling' sound went crazy and the machine sat there and 'did someting' over the course of a couple of hours (LOL). During this time I couldn't use it because it was so 'busy'. Never heard of such a thing, but removing ZA from my computer did the trick, and I was back to having about 2GB of free space on the HDD. Wierd huh??? I just decided to go with the windows firewall since this computer will be rarely used and won't have any important personal information on it.
So that's the story!
Thanks to all who made comments and suggestions.