Keep in mind that Windows XP will no longer be supported in 2014..
So now you have Windows XP with 3 GB of RAM? Try installing the GT 630... It's a waste using a DirectX 11 card with windows XP (which only supports DirectX 9), but it might help anyway your pc in graphics performance..
I tried to watch an HD video on youtube with my backup pc... It has got an Intel Core 2 Duo E6300 @3 GHz, 3 GB of RAM and a GTS 450... It
should be a few faster than yours... When I was watching the videos, my CPU usage was at least at 50-60% without any other appication running...
Since the Core 2 Duo processors are a lot faster than Pentium D CPUs, I think right now that the processor causes the issue... If the slower Core 2 Duo processor (which I own) is loaded at 60% when watching an online HD video, a Pentium D processor should be loaded at 90-100%, and this causes the lag in Windows 7. Windows XP, when in idle status, consumes a lot less CPU and maybe it allows the processor to run the video without lags.
I suggest you to keep Windows XP if he works great, and when Microsoft will no longer supports it, upgrade to Windows 7... Or save your money to take a new pc...
In my opinion your pc will be fine for another 2-3 years..
Anyway, I'm happy to see you solving this issue
