VAGRO thanks to you and really good that I can see some new users of MS here.
First of all if you change operating system as I see from text than you need to check calibration of wheels etc.
Second thing as I see here is that you use GM GIGA BANK. That is good. Latency on start is only when you put inside different sound (I mean totaly changed giga bank.) But that is on start not when you are playing. At playing it must not be latency expect whne you use sound on demand.
For GM DREAM bank was some mistak in one of ISO 3.2 so I think you are using wrong ISO.
Other possibility is that is DREAM CHIP out of slot.
64bits AMD 2800+ with 1Gb Ram is quit good machine but RAM is today so cheap and I can say you only to buy one giga more. If you can not find it in your country please contact me on mail.
Please do not histate to contact me or other users. You can ask any time.