A few problems here.
First your processor is a little on the light side, but would be adequate under other circumstances. However, with a laptop I am guessing it has on-board sound, so the processor is having to deal with some very complex sound files as well as everything else. A 32 meg video card is a problem too. But I think the real problem is the amount of available hard disk space. You would need a lot more than that for Windows and SH3 to operate happilly together.
However, try turning Sound Acceleration down to zero...
Start >>> Run >>> dxdiag >>> "Sounds" tab and move the slider all the way to the left. If that works great! Remember, however, if you play any other games on the laptop the slider can get re-set to Full.
And save often!
Good luck.
JCC
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