OK. The Pentium D was indeed introduced just about 6 years ago, in 2005. It is not the same thing as the P4, the main difference being that the D is dual core, as you realize, while the P4 was single core. The architecture of each core in the D is generally similar to that of the P4, though.
I was not aware that any Pentium D's were released having speeds as slow as 1.8GHz, though.
In any event, for several reasons I would strongly recommend that you have at least 3 hard drives, regardless of whether you try to use the existing computer, or obtain a new Windows PC, or obtain a Mac.
One drive would be for your internal system drive (the "c" drive in Windows), on which operating system files, program files, emails, small data files, etc. would be stored. That drive can be small (e.g., 256gB, or perhaps even 128gB), but should be fast (7200 or 10,000 rpm).
If you are using the existing computer, or a new full-size desktop computer, the 1TB (or other) large drive should be installed as a second internal drive, and would be used to store the music files, or other large amounts of data. It needn't be particularly fast (5400 rpm would probably be ok, although 7200 rpm is preferable). If you go with a laptop or mini that can't accommodate a second internal drive, you would use an external drive connected via usb, or firewire or esata if those ports are provided on the computer.
If you purchase a new computer that can't accommodate a second internal drive, and you decide to get rid of the old computer, you could put the existing 1TB drive into an external enclosure that you would purchase, and connect it to the computer via usb or firewire or esata. It would have to be reformatted, of course, to get rid of the os and other stuff that is presently on it. That is easy to do.
You should also have a large external large drive for backups of the music files and other data.
If you want to go with the existing computer, you can migrate the os installation from the 1TB drive to a smaller "c" drive, without having to reinstall Windows and all of your programs, by using a drive imaging program, or possibly the "system image" function that I think is provided in Vista. Let us know if you'd like further info on doing that.
On the question of whether the old computer, if properly configured and running smoothly, would sound different from a new one in your application, I don't think it is predictable. I assume the computer is located some distance away from the bridge and the audio system, since you mentioned that the connection path is wireless. That would seem to eliminate, or at least reduce, the possibility of rfi/emi from the computer causing sonic issues. (That kind of problem, if present, could be either better or worse with a new computer). And if I'm understanding correctly that the signal would be output from the computer either from it's ethernet (lan) port via an ethernet cable connected to a router, or from a built-in wireless adapter, I'm not sure what other hardware effects could come into play that might affect sonics.
Regards,
-- Al