Any _full featured_ desktop OS is going to be a little sluggish on an 800mhz machine with only 128mb ram.

If possible, add another 128mb chip. You will see an instant improvement.

As to your swap space. The large size may actually slow your system down further as there is now more to manage.
The rule of thumb is 1 to 2 times your physical memory, unless of course you are doing disk intensive tasks such as video editing or manipulating large iso's.

At a command prompt, issue the command: mkswap /dev/your_swap_device and check /etc/fstab to make certain that it is listed.