I am interested in one thing. Atm i am running windows XP with directx 9, now i am wondering will games run better (fps improvements, etc.) if i switch to windows 7 with directx 10 or 11.
Your RAM is very slow and your CPU is quite old. You will need a new motherboard to improve both. Your GPU is also lacking a bit, though not as much as RAM/CPU.
At this point your computer is far too old for there to be little improvements that you can make that would be cost effective and give you a nice performance boost.