I finally bought a new system which matches the requirements for GTA IV.
Intel i5 @2.5GHz
Nvidia GT630M 2GB
Windows 7 64bit
The game works fine except for one highly irritating issue. Whenever I press the movement controls ( w,a,s or d) the game freezes for like half a second. When I look around using the mouse, there is no problem. I looked into countless settings, updated the latest driver on Nvidia, changed screen resolution, reduced texture settings, disabled anti-aliasing etc etc etc. I googled for the problem but didn't find anyone having the issue eiher. Can you please guide me, anyone? I really love this game and this freezing thing is frustrating me so much.
Update: My PC now keeps showing an error-" GTA 4 has stopped working. Do you want to check online for a solution? " or something like that after about 15 minutes of play. It even freezes for some controls like kick(q), hit® etc which are done form the keyboard. The functions when pressed from my mouse work fine. In vehicle mode, to turn left or right, I have to use the arrow keys but if I use the 'a' or 'd' keys the game lags.