I played the game a while ago on this same machine (this was before 1.04b) and it worked fine. However, that being said, I know other people are using the mods without trouble. So I'm not sure what exactly the issue is in this instance.
My video card is a 9700 and my CPU is a 2.4Ghz AMD. They haven't had trouble running any other games, except for the big graphic intensive shooters where I might need to turn down the video settings a bit.
The problem itself seems to be getting worse. Here is an example of how bad it has become, I can't even play the game on the surface anymore:
