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RAM is so cheap nowadays (again, suddenly, for no reason) that I'd go with 4 as a minimum. But that aside, you can install it on a system with 512mb, although I think you have to tweak something on the installer iirc. For me, it ran quite happily on a P4 with 512mb of RDRAM and an fx5200 with aero enabled, but if you pushed it too hard it would start killing the HD.
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