It should work OK bu twe can discuss the implications of mixing different speeds of memory. Since you have two memory modules running at the faster speed plus one memory module running at the comparatively lower speed , you are mixing the RAM speed.
Generally, if you mix RAM speeds the system will default all the RAM to the slower speed. This is probably why the slower RAM is not recognized when you set the BIOS to the faster RAM speed, but the slower RAM is recognized when you set a slower RAM speed.
Now, you must consider the trade-off between having slower RAM, and having more RAM.
This trade-off really depends on your usage of the computer. If your computer regularly runs low on memory with only 1 GB of RAM installed, installing the slower memory module (increasing system memory) should benefit performance.
Even though the entire system RAM will be slower, accessing this (marginally) slower RAM will still be significantly faster than the computer having to swap data between the RAM and hard drive (virtual memory) due to the lack of available memory. However, if you are not fully utilising the current amount of RAM, installing the slower RAM will likely decrease system performance.
This is because the computer will not utilize this extra memory, since the existing memory is not being fully utilized, so all you are doing is slowing down the entire system memory! As you can see, the decision whether to install the slower memory depends on your computer usage. I suggest using the Windows Task Manager to monitor available memory. In Windows XP, press CTRL-ALT-DEL and then click the ‘Performance’ tab. In the ‘Physical Memory (K)’ area, look at ‘Available’. If you notice this number getting low (be aware, it is measured in kilobytes, so 1 MB = 1000 KB) this means you are getting close to exceeding your system RAM. In this case, it may be worthwhile installing the slower RAM to increase total system RAM. Usually it defaults to the slower speed memory chip