Your computer can run it. Ur computer meets the minimum system requirements.
In terms of upgrades, u can upgrade to 1gb of RAM for an incredible system boost. Now, this might cost around 100 bucks. So this leaves u with 2 options:
1. Buy a better processor. This will increase system performance incredibly but u will still play with craptacular graphics. But it will play very well.
2. Buy a graphic card. This will increase graphic power, however, it might lag sometimes, or well, yeah it will lag.
U can buy a 6600GT with your 200 bucks, which right now is a very good buck for buck card. Or u could buy a x700. The x700 will be cheaper, but the 6600GT is better. But, u really should'nt think of anything "too" powerful right now. Ur system isnt all that great so go witha x700.