If upgrading your RAM is at all an option, I would do it. You have a very small amount it seems, though I think that even with 2 GB of RAM you could do a lot with your hardware.
Yes it is for sure worth 20 bucks of your money to buy Morrowind and use mods on it, the amount of improvement you can apply to your game is simply ridiculous, and any Morrowind fan is missing out on a great experience if they don't get the game on PC. I personally started out on Xbox like you, but my console days are long over so last summer I bought Morrowind on PC. The poor graphics (in comparison to modern times) were a pretty big hurdle, but I completed the main quest without any modifications (or maybe just better bodies...don't remember) and I had a blast, it just took me a few minutes to sink back in with my old friend, Morrowind, but I loved it. And then I really got into modding, and they're an amazing boon - you can bring Morrowind's graphics to basically something like Oblivion.
It's very easy to install the game and mods on Steam - no troubles at all. It's also very simple to uninstall and reinstall Morrowind, incase you need a fresh install because you screwed something up or whatever.
I don't know how strongly you feel about Morrowind, but for me it's definitely my favorite Elder Scrolls game. And by spending the extra 20 bucks to essentially buy Morrowind twice is worth it in and of itself, just to inflate Bethesda's Morrowind revenue and say 'Hey! Hey you guys! Remember that one really great game? Yeah, make more like it...' But even if you feel indifferent about Morrowind and just want to get back into it, the mods are amazing.