Maybe the motherboard's BIOS has a bug. Are you using the latest BIOS version? It's pretty common for motherboard manufacturers to release updated BIOS versions to support newer hardware, so you can try updating it if you haven't done so already. It's perfectly safe if you follow the instructions step by step.
Android pretty much summed it up, and DX10 can't run on XP. But you can update your version of DX9 by downloading and running this little tool which will update DX9 files to the latest versions.
If it is, then the most RAM you can have is 1GB, so you need to add 1 more stick of 512 MB DDR (333 or 400 MHz, 400 is backward compatible with 333 and are easier to find and cheaper in most cases). You should be able to pick one up for ~10 pounds.
The board also has an AGP slot. The best AGP card on the market is the Radeon 3850 512 MB, which is around ~90 pounds, any other AGP card will be cheaper. Make sure your power supply can handle it though, it should be more than 300W.
Are you sure you're saving in the right folder? Maybe you have multiple copies of LFS, save in the correct one. Or try in the CMX viewer (with the BF1).
No matter how used rotors may be, they are all worn out evenly like in the attached pic. But yours are worn out unevenly, which is impossible unless the disc was not flat, but in some wavy shape which allowed it to get more worn out in some areas than in other areas.
I have P5Q Deluxe, I disabled Expressgate completely lol, and turned off the logo, I like to see the POST messages when booting up. I just like that it reminds me of the early days of computers.
As for that driver, I think it's the internal version 8.50. I have catalyst 8.12 and my driver version is 8.561.
I completely agree with BigTime, a fast dual-core is better for gaming than a slower quad-core. The opposite is true for photo editing and movie editing.
Final thing, the Athlon 7750 is a piece of shit so don't go for it, E8400 is awsome, I know cause I have one myself.