Did you open the task manager and see how much ram you are using?
How you use your laptop is very much a personal choice, and I see from the HJT log that you've installed a bunch of non-essential programs: PnkBstrA.exe, Ipod, Messenger, avg AND symantec AND ad-aware, Windows Live etc, none of these programs are a problem in themselves, but you need to make sure that your laptop has sufficient ram to support them, in your case you're system has what I'd consider to be the minimum ram required to run windows and a decent anti-virus program: AVG internet security suite should be all you need as a defense against viruses and spyware. You haven't said whether you're using XP Pro or Home: Pro uses more RAM than Home! How did you upgrade your disk from 40Gb to 120Gb? Did you clone your disk or did you reinstall everything from scratch? If you cloned your disk then maybe you've carried existing windows problems over to your new disk. If you've been infected with viruses/spyware in the past then maybe windows was damaged in the removal process, while you may be virus/adware free now, who can say what damage was done?
To answer your questions:
1. Sure, reinstalling XP should guarantee that you don't have any viruses/adware lurking that we can't see from the hjt log and ensures that all your windows files are pristine.
2. Installing more ram is not usually a big job. Most laptops have a panel on the bottom held in by 2 screws. Remove the panel and you should see the memory modules. With a bit of luck, you've got a 512Mb module installed and space for another module. If you're out of luck, you'll have 2 x 256Mb modules and no spare ports, in which case you'll have to remove one of your 256Mb modules to install a bigger one. Try and find some documentation for your laptop and see if it supports 512Mb, 1Gb or 2Gb Ram modules. You also need to work out if you've got DDR1 or DDR2 ram, they're not interchangeable, again: any documentation you read about your laptop should help. A couple of laptops I've upgraded the memory slots were under the keyboard, so this makes the job a lot harder. If all this sounds too complicated, then take the laptop down to a local store, a few I know will install the ram for free or a minimum charge.
3. No - XP doesn't support this.
