The most recommended upgrade for this system is a Solid State Drive, here is my affiliate link to Crucial here. If purchasing a SSD or Memory Upgrade please use these links as I will get a tiny bit of commission which will help fund my guides.
SSD Drive Upgrade
This system supports 4 GB of RAM (2×2 GB Modules). This can also be purchased using the affiliate link above.
It is recommended to install Windows 10 on this system see Windows OEM FAQs and Downloads. The Windows Vista OEM or Windows XP Product Key won't be compatible with Windows 10 Installation Media however you can run Windows 10 Unlicensed. Windows 10 will have most of the system drivers required inbuilt however you can install the Windows 7 Drivers if you have any unknown Devices in the Device Manager.