It seems daunting, but it looks like replacing your HDD is going to be pretty easy. It might take you like 45 minutes to an hour the first time, but if you do it again and again, it'll take like 15 minutes after a while. The HDD replacement is the easiest part. The only issue you may have is installing the OS and drivers, but with windows 7 or 8, it's ridiculously easy to use windows update or search up the model number for drivers. It'll be easy to use that touch screen laptop as a tablet or travel laptop you can beat up.
Probably the best option for you since it's a secondary laptop...
1 hour elbow grease (need a screw driver)
$60 solid state drive 80GB or so (You could go higher... but most likely it'll be a waste of money. Spend the extra on a 1TB external hard drive instead or something)
15 minutes OS install (Need windows disc, the serial is probably on a sticker somewhere on your laptop)
1.5-3.5 hours updates depending on your internet speed.
It's pretty simple
A SSD makes many new computers seem slow. Once you've tried it, you may end up being interested in upgrading your current laptop as well. But try it first.