OK, first things first, you should upgrade to windows 7 64 bit. Your processor can take it.
Pros about your PC: Processor
Cons: You are using a hard drive not an SSD
Low PSU
No graphics card
2 GB of ram.
Ok you should go to 64 bit OS because 32 bit can only map out 4 GB of ram. You are going to need to upgrade your nam to at least 8 gb for that, and you will need a better graphics card. Loook for a graphics card with about 2 gb of Vram. Then you might want a better PSU. Also you might want to get a SSD because it is alot faster than a hard drive. but that is optinal. Hope you find what you want.