Red_Move, is the system functional? Does it run Windows?
If it does, grab Speccy - System Information - Free Download
and install the program (it's free, don't let the "pay for" link sway you, look further down) once the program is running, go to the File menu and choose "Save as Text File..." and then save it to the desktop. Open the text file and paste it as a reply here. It'll help us isolate things on the board that will help us figure out which CPU it'll support.
DDR2 is relatively expensive these days. If you can get yourself into 4GB of DDR2, that would be best.
The GPU is definitely underpowered as Echo suggested. If you want to play "the latest games" you'll need a high end card, or at least something fast enough for the games you want to play. Give us an idea of which games you like and we can go from there.