Hmm, 128mb isn't a lot of memory, but you still shouldn't have that problem.
One thing off the top of my head is if your Finder (and all the folders contain therein) may be set to
calculate folder sizes. This means that every sub folder visible in whatever folder you have open will
attempt to display the exact size of all items in all the folders at one time.
To check for this, double click your hard drive (your start up disk), then select from the menu "View"=>"View Options" and make sure the Calculate folder sizes" button is unchecked. If it was checked, that was probably your problem
if not: I'd do a typical Mac thing - rebuild your desktop with extentions off-
Start the computer, hold the "Shift Key" - You should see "Extentions Disabled", then immediately
hold down the 'Option and Apple key" together during the start-up and you should see
"Are you sure you want to rebuild the desktop?" Select YES... Let it do it's thing, then RESTART.
still if not : In your Preferences folder (in the System Folder of your hard drive) you may want to delete your Finder Preferences (NOT the Finder, the prefs!) and restart.
If that doesn't work, well, you may need something like Norton Disk Doctor or Disk Warrior to fix your problem. Or in the worst case, re-install the OS.