The video card is holding you back a bit. Make sure you are running at no hogher than 1024x768, with maximum texture size set to 256, and check the "preload textures into system ram".
In the game, uncheck "transitions", and set the detail slider more towards performance. That might help a little. You probably should be running 800x600 for that GF2 card though.
The sound problems sound like the card/chip is sharing an interrupt with another device in the system. Look in "System Information" (Start->Programs->Accessories->System Tools), expand the "Hardware" list, then select "IRQ".
Check to see how the interrupts are being assigned.
As a side note, virtually all manufacturers have stopped supporting Windows 98 relagating you to use drivers with known problems.
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The new system you are proposing will definately be better, but more information about the video card is needed. The amount of ram on a video card is not indicative of the performance of the card as manufacturers will opt for much slower ram (reducing the overall performance) when putting 256MB of it on the card.
This holds true for all but the very high end video cards.