Lol that's just a dock, not running programs...the only other (visible) programs he's running are those 2 instances of Internet Explorer, which he's using to read and respond to this thread. Firefox is better btw
Anyways, I think first you should upgrade your PC. Is that a dual core CPU you have? It doesn't look like it. Plus you only have 1 GB of RAM and you're running Vista. You might as well walk with one leg lol.
If you're going to use 1GB of RAM, you should use XP. For Vista, you should use 2GB, preferably 3 or 4GB. Today, 4GB of RAM can be had for less than $60 if you look in the right places.
I'd also recommend you upgrade to a dual core processor. An overclocked Intel Core 2 Duo will do the trick nicely, and they can be had for less than $150.
Regarding the buffer: I'm not an expert on this, but the smaller the buffer, the less displacement there will be when you record. However, the issue is if your hardware and your soundcard/sound device can handle it. You need to find the sweet spot where your audio won't skip or distort, while still keeping the latency as low as possible.