Make sure you dont have high quality fsaa (smoothvision) enabled, cause at 1024x768 smoke is not a reason to stutter. You will see a big framerate hit, but no real stutter.
I play on a similar system and get 40-50 flying low around a large field with smoke, and never drop below 26-30 even when flying right through the stuff....and thats at 1600x1200 32bit
