1. Too new. It won't work.
2. Maybe, but let's be honest with ourselves here. That's a pretty Mickey Mouse setup. You deserve better. Just spend the $600 on another computer dedicated to your PVM. You're worth it.
Here are your options for video cards. The best one is the x300, and it's only like 10 bucks on Ebay.
Catalyst 6.5: ATI Radeon 7000, 7200, 7500, 8500, 9000, 9100,
9200, 9250, 9500, 9550, 9600, 9700,
9800, X300, X550, X600, X700, X800,
X850, X1300, X1600, X1800, X1900,
X1950, ArcadeVGA 9200/9250, etc.
Catalyst 9.3: ATI Radeon 9500, 9550, 9600, 9700, 9800, X300,
X550, X600, X700, X740, X800, X850,
X1050, X1200, X1300, X1550, X1600,
X1650, X1800, X1900, X1950, HD 2350,
HD 2400, HD 2600, HD 2900, HD 3200,
HD 3300, HD 3400, HD 3410, HD 3450,
HD 3550, HD 3570, HD 3600, HD 3610,
HD 3690, HD 3730, HD 3750, HD 3800,
HD 3830, HD 3850, HD 3870, HD 4230,
HD 4250, HD 4350, HD 4550, HD 4570,
HD 4580, HD 4650, HD 4670, HD 4730,
HD 4750, HD 4800, HD 4850, HD 4870,
HD 4890, etc.