This laptop specs aren't good enough for Windows 7 Ultimate?

Hewlett-Packard Compaq Pressario CQ40-104AX « Bigbasz’s Personal Blog

Ignore the language, I just want to show you the specs (scroll down a little bit to find it).

FYI I upgraded this laptop's RAM to 3 GB.

I use Driver Genius regularly to keep the drivers updated. And of course Ccleaner to keep the system clean.

I'm pretty sure this OS is free of virus/malware.

Not sure if you know DotA (defense of the ancient), but this laptop can barely play DotA. I use 1024x768 screen resolution. When the battle starts, it lags. Thanks to the lag, I often lose the battles. -.-

And no, I am not interested to play other games. Just DotA on this laptop.

Kindly give me suggestions to improve the performance? Maybe downgrade to XP?

If you upgraded RAM to 3GB I'm not sure downgrading to XP would give you much more than let's say 5-10% speed up, if that much, probably not. The problem is with laptop you can't upgrade much beyond memory and you already did that. I'm not familiar with the game, but is it graphic intensive, CPU intensive or both? Lower resolution to 640x400, see if it helps any, check system resources during game, does it run out of RAM and trashing the hard drive, is CPU pegged at 100% and can't do no more, is the graphics too intensive and need to lower the settings? At the end there is not much you can do. You could try to see if overclocking is possible for CPU and GPU, could probably get 5-10% if it's doable, maybe upgrade CPU all together (I think they go up to 2.4GHz). At the end new faster laptop may be less expensive in the long run.