I've just tried XP compatibility mode, same thing. Level 5 nets me between 1fps and 6fps, monitored with FRAPS. If I turn all shadows off I get several HUNDRED frames per second, it doesn't take anything away from gameplay but seriously, shadows don't hurt that much...
I see you ninja edited, according to Task Manager I have over a gig free, and I have no problem with other (newer) games such as Oblivion, Fall Out 3, etc. I have another rig which I can try this on, Phenom 2 @ 4.7ghz, 4gigs DDR3, 5870 1GB but this machine is way over powered for the game as it stands. I remember playing it on a Celeron 1GHz with 192MB RAM and a TNT 2 graphics card...