The main reason that your having problems with video playback is that your hardware is old and doesn't support the decoding of the newer video codecs at the hardware level. You PC is decoding these videos using software and in your case your hardware just can't handle it. You will get a noticeable increase in performance in video if you installed a newer video card that can handle HD video at the hardware level because it would off load the decoding to the GPU and free up your CPU a little. I'm not going to say that you would get a huge increase but you will be able to play HD video a lot better. Now in your case you might also need to upgrade your power supply. Here is a card that would work for you.
http://www.newegg.com/Product/Product.aspx?Item=N82E16814500262
Also getting a 2GB memory kit would help a little with performance but your biggest issue is the GPU and power supply. You need to have a minimum 300W power supply with that card and with your machine being so old I wouldn't suggest running that card on the stock one. Power supplies have a tendency to go out when their old and you put a new load on them.This is the Cheapest power supply that I would trust.
http://www.newegg.com/Product/Product.aspx?Item=N82E16817371003
Now if you plan to go that route I would take a look at your cost so far. You have 60 bucks for the card and 30 bucks for the power supply. Your up to 90 so far if you decide to throw in a 2GB kit of RAM like this one:
http://www.newegg.com/Product/Product.aspx?Item=N82E16820231039
You looking at another 40 bucks to improve your old machine.
So now we're up to 130 bucks. If you go to tigerdirect.com and look through their barebones systems you can find an decent PC kit for around that price. Here is an 185 dollar kit that all you would need to do is add a hard drive to and you'd be all set.
http://www.tigerdirect.com/applications/SearchTools/item-details.asp?EdpNo=7620237&csid=_61
That PC would handle everything you need for some time to come. (at least a few good years anyway). If you had a lot more money to burn then:
http://www.tigerdirect.com/applications/SearchTools/item-details.asp?EdpNo=7539623&CatId=333
That's an intel core i3 kit for 220 and you would need to add a DVD and a Hard Drive to it to be go to go. The i3 would definitely last you for quite some time.