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An HD 3850 + a RAM increase should get you low-medium settings (leaning towards low because of your slow CPU) ...
I would either invest more and buy a new computer for around $700-$1200 or buy an XBOX 360 ($200)/PS3 ($300) and continue to use your old computer.
A 5-year-old PC like yours isn't going to do too well for gaming, even w/ a GPU and RAM upgrade.
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