Darn. I am currently running image c2600-ipbase-mz.123-13.bin and I see that one doesn't support IPSec.
Then I used the Feature Set Tool in order to browse, but so far I've seen images which would run with minimum 96/32M minimum.
If you know an IPSec image which can run at 64MB RAM and 16MB flash, please let me know.
When I look into that feature set for the 2621XM the memory requirements increase to 96 and 32. But it looks to me that for the 2621XM there is a 12.3(22a) Advanced Security feature set image that requires only 64 MB and 16 MB. The image name is c2600-advsecurityk9-mz.123-22a.bin
 now that I look back at the entire thread I notice that the title of the original post did say 2621XM. I somehow missed that detail in my first response.