From the sounds of it you have one physical drive partitioned into two, with all the spare space on the partition that doesn't hold your operating system. If your Vista disc is an "upgrade" disc, it will normally need to be installed on the same drive as your existing Windows installation - which (I suspect) is the drive that does not have enough space. Factor in the insufficient RAM and the various other possible hardware problems an upgrade might throw up, and I would say that you would probably be best off not attempting to perform such an upgrade yourself. (From your description of your computer skills).
This is not to say that your system is not going to work with Vista, but that it would probably require someone who really knows what they are doing to perform the upgrade. Whilst I'm sure everyone here would be happy to help, there is a limit to how helpful we can be in a "question and answer" situation.
As vehelpfulguy says, you will find it easier to buy a new Vista machine. On the other hand, if this is a "spare" machine and the upgrade is a project rather than something you need to do I always find that the best way to learn how to do things is to give them a go - just be warned that you may end up with a brick!
If I was to attempt the upgrade, I would install more RAM, make an image of your drive, repartition the space, then upgrade to Vista and search for Vista drivers. Some of this would involve some software that you probably don't have, and would possibly need help to use.