When programs request for more memory, the memory manager will see if there is enough real memory available before doing so.If not, the memory manager will then scan the physical memory for items loaded into the RAM that hasn't been used and not critical to system operation and save the contents of these memory to disk.This process is known as swapping out which is where the orignial virtual memory term swapfile comes from.Doing this will free the RAM and when these swapped items are needed again, they will reload it to the physical RAM.In Windows XP, this swapfile is known as the paging file.It is held in the root directory of the current boot drive by default and when it is accessed, it isn't hard to see that having it on the same physical disk partition as your programs cause alot of lag.Moving your pagefile to another location will provide a performance boost but this depends on your PC's specs.If you don't have an extra hard drive available, you obviously don't have the option to do this but to create a parition on your hard drive specially for it, it will be much slower then having a second hard drive but it still beats than having none.

You can force Windows to unload DLLs from memory after the applications using them are closed by making sure [HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Explorer\AlwaysUnloadDLL] is enabled.

PC Astray is right, the best way for swapping file is move to another hard disk (in same pc), because this free a lot of resources from the system.

Another option is configure the swapping file: (best way)

Custom Size:

initial: 1.5 ram (example if you have 512*1.5 = 768 mb)
maximum: 3 ram (512*3= 1536)

Greets
Deivid