Just to confirm this, I have managed to install Windows 7 on a laptop that has a 1.46ghz processor, 521MB RAM and an intergrated graphics card. The only issue I had was that Windows 7 didn't have a biult-in driver for my Soundmax card. I found one on my manufactures website which is a UK company called Ergo. I have also installed AVG Free as it's a laptop I don't use often.
It runs with the Areo and it takes over 400MB. The laptop is a customized version of ASUS U5F and it's customized by a company called Ergo and they called it the Microlite 411. I went back to XP. I was only testing.
Upgrade your memory (not yet!)did you install Windows 7 yet? And we weould like to get more information about your laptop!
Try disabling themes through the services tab on the task manager. This will free up a lot of mem for ya.