Yes you got ripped off big time.
This is a 7 year old system.
I know I own one... in the flavor of a SuperMicro X5DA8 (which supports 12GB of memory)
The memory is way slower (single ddr 333 to 400 max)
AGP slot is way slower than the PCI-E slots in the dual core system
The bus speed is slower (the pipe from the RAM to the processor)
The best video card you can put in there is a Radeon 4650 AGP which will be bottlenecked by your ram speed and your proccessor speed.
I tried to extend the life of my system and it isn't worth the trouble. Mine is now a server.
You would have to run a server OS to enable PAE and be able access anything above 3.5 GB of RAM.
Your neighbor is trying to offload his old crap so that he can buy himself a new video card or something.