video card upgrade vs ram

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Video: 64 MB video RAM is not bad. For example, Microsoft claims you can run Aero with 64 MB (but recommends 128 MB). The GPU speed is pretty important for video editing. Your new 512 MB card probably has a much faster GPU. Also, the peripheral bus matters a lot. Go with PCI-E 16X (twice as fast as AGP 8X). Don't even think about a plain PCI video card.

RAM: The 512 MB RAM is definitely too small for Windows XP. For the best performance, you need sufficient RAM to avoid Windows XP using the paging file. That means a minimum of 1 GB to me. My Windows XP workstation has 2 GB. Furthermore, the RAM you have is likely a lot slower than today's DDR2-800 RAM.

CPU: Your Dell Optiplex 160L probably has a Pentium 4 2.2 GHz processor. That is pretty slow by today's standards. Video editing is very CPU-intensive. Of course, you likely don't have many options for upgrading the CPU without a lot of other expense (new motherboard, new RAM).

Recommendations:

1. Upgrade your RAM to at least 1 GB. 2 GB if you can.

2. When you can, buy a new PC with at least AMD Athlon 64 X2 3000+, 2 GB DDR2-800, and a modern PCI-E video card with at least 256 MB VRAM. AMD dual core processors are an incredible buy these days. Even the 6000+ is relatively inexpensive (about US$170).

Good luck!