My general rule of thumb is to set it at one to two times the amount of memory. So in your case, between 256 and 512 MB. And I always, always, ALWAYS make it fixed. If you don't, Windows will burn cycles resizing it for you... and it will do that when you most need those cycles.
And I agree with Sir Krustin (at least partially). My swap file on my main PC is on drive D, not drive C. Most of my application stuff is on drive C, and separation is good. I find 2GB of virtual memory a little hard to swallow, though, but if you've got something that consumes that much memory, and your system can support it, set it up there...
