First, open up AH and click on Video settings. Your computer is a bit on the slow side so I'd recommend a 256 texture size. You want to have the HARDWARE VERTEX, OPTIMIZE OBJECTS & OPTIMIZE TERRAIN boxes all checked.
Second, bring up the clipboard and click on CONTROLS>GRAPHIC DETAILS and then click on DEFAULT. See what difference that makes. If that puts you back to high #'s, you can experiment with the sliders, adding more close detail. You also want all those boxes checked except for animated water.
If none of that helps, give Skuzzy a call. Be ready to give him your computer + vid card specs, along with the driver update info. He may suggest an alternate driver update for you. The newest drivers aren't necessarily the best - depending on your card and computer.
Good luck!