"free space" is NOT the same as RAM. Free space is relative to 'storing Data' on the Hard Drive (installing games, saving a picture, etc.).
RAM is the amount of memory your computer is using to 'think' on the things you want it to think about. So think it like at work. you get one project across your desk, but then the phone rings, someone sends a IM, someone uploads new data file to be reviewed, someone is standing at your desk, and numerous emails come in that you need to read and MAYBE respond to. So If the person on the phone is speaking, can you talk to the person in the doorway at the same time as tapping out email responses AND answering IMs?
That is the multitasking we ask a computer to do every moment of the day, and trying to ask it to 'remember' how to do each 'thing' seperatly, demands more and more 'RAM'. But like the example you 'run out' of memory when trying to think how to SPEAK to what the person on the phone is saying, what the email is about, what that person in the doorway is bugging you about, AND what that IM was flashing you about all at the same time.
BUT in computers, back in the day, when you ran out of RAM your computer would just error out OUT OF MEMORY and 'crash', just as you would crash in the office and 'screw up' because you can't handle all those things at one time. In Real Life you would get a Personal Assistant to help sort these things out, and the more busy you are the more PAs you have, same with the Windows as it gets the 'Cache" disk space to 'pretend' to be RAM so it doesn't forget EACH thing your asking these days. BUT that doesn't REPLACE the RAM, just as your PAs don't replace YOU being at work. So is the same issue with your computer, you still need 'some' RAM to swap in and out what the computer is 'focused' on doing that second (Cache is temporary just like a Post it Note, just a reminder, but doesn't actually do more than that). So that amount of available RAM changes with your demands and needs.
As said the ONLY solution would be to increase the RAM, but your talking very costly, and most likely won't really help as that is a very very OLD machine. It be more cost effective (aka you want the computer to work more then the next couple months right?) to instead invest in a newer computer because how 'cheap' they are these days which will last you a good 3-5 years from TODAY, rather then just a few months when something ELSE dies on the computer (remember they ONLY warranty the actual hardware-the physical stuff you touch- for 3 YEARS, after then you have to expect like old tires it will suddenly BLOW).