read through the other threads on lagging with ATI cards. i'm pretty sure you'll find either a direct solution or pointers to one there.
while playing, press NUMPAD-SLASH to bring up the game's framerate meter. it has a nifty little feature that records and tells you the last spike in performance. when you first start a game, i find several seconds of spikes and crap performance. but give it 30 seconds and everything sorts itself out (and for the record my machine currently has 1GB RAM).
also, you should console in 'ren_showNetworkStats' to see how things are faring in MP. take a look at the latency and behind values to give you an indication of who (if anyone) is lagging. there's also the sim-time value which should be under 50ms most of the time.
that said, stop using qualitative adjectives on technical objects. an Athlon X2 4200+ certainly isn't newish. so i have my doubts as to the validity of your statements my drivers are completely up to date and high quality connection.
tell us your specific Catalyst driver version. if you don't know then say so; we'll help you work it out.
