Assassin's Creed III: a lack of clarity

The main concern you should have is with regards to what DirectX version it runs in and what technologies windows xp can handle.

As for upgrading harming performance, that depends on your current hardware (which is likely as old as xp). So yeah, unless you're running new stuff on old software, then there'd be some hit.

I actually had better performance in games after installing Win7 compared to XP, and that was when I still had my Single-Core CPU. Anyway AC3 needs DirectX10 to run as far as I know and XP does not support it, sure you can try all kinds of fixes and what not, but your performance might be affected and it CAN be a hassle.

It seems to me that requirements on GMG are simply wrong. They claim it's a DX9 game, which it clearly isn't due to SM 4.0 usage, which is part of DX10.

The Steam requirements are far more extensive and in line with what Ubisoft themselves say.

Just install win7. It's so much better than XP.

paying hundreds for a rig: worth it

paying 65 to make the rig capable of playing games: not worth it

Whatever magic pixie dust allowed you to have this computer in the first place could maybe spring for an upgrade too. Or maybe replace the whole machine if you're lucky. :-)