" The rest of the hardware doesnt really have much of an impact on the playing of HD-DVDs" Very incorrect. First you most likely need a bit of an upgrade on your video card, as it is only 128MB, I would recommend atleast an 8600 or an 8800 GT.
Also while you CAN run your video on the setup you listed with the HD movies (not HD-DVD as the above poster assumed incorrectly), to play it SMOOTH, you need a few tweaks.
The video card as I stated at the begining will be the best thing.
http://www.pcworld.com/article/140985/play_hd_movies_on_almost_any_pc.htmlThis article explains the minimum requirements to play Hd movies.
The pricing in the article is about a year (and about 300%) out of date so don't rely on that but the rest of the information is pretty relevant.