Bill have been searching for a solution to your problem and have just re-read this thread. One sentence just now jumped out at me...
when in XP mode I can not do anything with the display but... when I'm in classic mode I can do everything as if I right clicked my desktop and went to properties.
Are you saying that when in Classic Mode that you CAN change the display properties? If so, leave it in classic mode and use the computer.
You asked if XP could be taking up all the hard drive space, I am no expert but I doubt it. When you purchased this computer do you know if the previous owner had removed all personal items from the computer? Music files, photo files, etc.? Did the computer come with XP installed originally or did the previous owner install it, of did YOU install it over a previous operating system?
You Belarc report does not show anything installed other than XP and updates...the Belarc report should have shown ALL programs installed on the computer. I just ran it on mine to be certain and it does show all programs installed on my computer.
Guess what I am trying to say here Bill is you get what you pay for, $50 for a computer at a yard sale may be a "deal" but if you have no disks for the computer then you are somewhat "stuck" since you cannot reformat the computer without the original disks. This would certainly restore the computer to its original state and give you more space on the hard drive most likely. You really can't use disks from another machine to do this either. The only way I can suggest to regain some space is to remove some of the programs on the computer since a reformat is not possible.