A couple questions: Where does the data come from? You mention ad hoc queries and application performance. What's the schema? Is this OLTP and 3rd normal form or thereabouts?
Here's why I ask: If your application is being impacted by long-running ad hoc reporting queries I would agree with the recommendation to move the data each night to another server. More memory is always a good thing, but your OS must be able to manage it.
I would seriously consider upgrading to SQL Server 2005. Mainstream support for SQL Server 2000 ended a couple months ago. If something "bad" happens, it may be cheaper to upgrade than to fix. If you can tolerate both a wait (a couple/three months) and are willing to risk deploying a RTM version, you could jump straight to SQL Server 2008. Combine all this with Windows Server 2008 and you will have an up-to-date system.
The "pain" of upgrading to SQL Server 2005 or 2008 from 2000 is roughly equal. Also, you get SSIS which will move more data - and faster - than DTS.