exact xubuntu requirement on site are the following :

To run the Desktop CD (LiveCD + Install CD), you need 128 MB RAM to run or 192 
MB RAM to install. The Alternate Install CD only requires you to have 64 MB RAM.
To install Xubuntu, you need 1.5 GB of free space on your hard disk.
Once installed, Xubuntu can run with 64 MB RAM, but it is strongly recommended 
to have at least 128 MB RAM.

these are obviously minimum requirement and if you choose the lowest your 
system may be slow
to install the xubuntu desktop you need 192 MB - once it's installed 128 MB 
sould by sufficient for reasonable adequate speed (considering your PC)
if you only have 128MB it might be best to install via the alternate install CD

-- 
Xubuntu works terrible on a PIII 1GHz 128MB ram
https://bugs.launchpad.net/bugs/161962
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