I haven't touched anything other than linux in a decade now but I honestly would recommend XP if you don't have a good graphics card unless security is important to you (XP is not supported anymore). This computer is actually a step ahead of the requirements for Windows XP.
If you want Linux, you have two choices:
1) Go with any distribution where XFCE desktop environment is available. But you need a decent graphics card as gtk+2 is a bit demanding.
2) Puppy Linux.
http://en.wikipedia.org/wiki/Puppy_Linux It *should* perform a lot faster than XFCE.
There are plenty of torrent applications on Linux (Transmission, etc..) and many web browsers (Firefox, etc...)