What you need, urgently is RAM, not a lot of ram but GOOD ram. I have 512MB and running Perfectly smooth, never experienced lag. Get Corsair XMS DDR400, it is a lot more expensive but even 512 would do it with every App and every game. I would also reccomend AMD proccesor, 2500+ or better. Check newegg.com, best prices on the NET and fast shipping too
Imagination is more important than knowledge...