GPU:
1st: No
2nd. Drivers crashing, update them and remove ALL GPU drivers you have had before.
3rd: Drop the settings in GTA IV.. I'd rather not touch nVidia control panel unless you know what your doing.
CPU:
1. You don't need more than 1 core of it to run SA with no lag. It's the video card that causes lag if drivers are crashy.
2. I got the CPU at 4GHz... Overclocking is a possibility, but I would not recommend it again unless you know what your doing

Edit: To the GPUs first question, I can specify why:
8800 GT / 9800 GT is the "oldest" and "worse" video card what runs PhysX lagless
256 memory bit, that's only good thing.
GPU Memory: 1Gb on that video card. Just no. It actually loses performance because of the amount of Memory but it can't use it.
MHz doesn't matter in video card anyways.