The 4670 is a good card in its own right, dont get me wrong here.
But they aren't exactly designed for gaming at 1080P.
These cards will do well for most games at a res of 1440x900 or lower at med-higher settings. And can do fairly well at 1680x1050.
For 1080P gaming, you'll likely need a powered card, not really something that draws its power from the PCI-X slot.
I would adjust graphics down and see if you can smooth things out.
it is capable of much higher resolutions, True, but rendering a 3D game at those resolutions is a whole different ball game.
For everything else, even HD/Bluray playback they do excellent. Only hi-res gaming will they struggle.
Hope this helps.
Beyond that, if your running 7 x64, 4GB RAM would be the ideal amout of memory for gaming. 2GB is cutting it short, even though you have 1GB GPU RAM.
I would suggest:
Update Chipset Drivers
, GPU Drivers, and Direct X .. make sure all up to date
Set graphics at a med. settings ... ((NO AA and NO AF))
Try 1280x720 (its a 16x9 res) and see if things smooth out.
if so its just a matter of making adjustments at a higher res to balance things out and find the "sweet' spot for that card & resolution
Another thing worth pointing out: Any game that is online is a bad judge for how the card performs. As you have now put many other factors into the equation such as internet connection, which can cause lag etc, that may not be any fault of your set up at all