my old pc was almost the same as yours but i had a FX5900 Ultra, it could handle most games, Far Cry i runned smooth on medium settings, im pretty sure it was my CPU slowing me down.
I suggest you just add 512 MB more ram, get a second hand Radeon 9800 Pro or a Fx5900 Ultra, and maybe overclock that CPU, you may need some extra cooling then
with that you should manage to play new games even tho you might need to adjust details to offload the CPU
By the way Gainward overclock pretty well http://service.futuremark.com/compare?3dm05=1489033
Description Live at DreamHack // Gainward 7800GTX 512MB SLI cooled by Overklokk dual evap cascade (built with only two compressors to handle GTX512) // LN2+Mousepot Cooled FX-57 @ 3928MHz // 2x512 Corsair XMS3200LL BH-5 // DFI NF4 SLI-DR // OCZ 600W SLI PSU // Many thanks to our firends at TechSweden.org
Display Information
Graphics Chipset NVIDIA GeForce 7800 GTX
Driver Name NVIDIA GeForce 7800 GTX
Driver Version 8.1.9.5
Driver Status WHQL - FM Approved
Video Memory 512 MB
Core Clock 779 MHz
Memory Clock 2052 MHz
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