Putting a SSD in your machine would be the biggest bang for the buck upgrade. That slow 5400rpm spinner is the big bottleneck in that system. It's cheap too. A 1TB SSD from Crucial is going for $110 right now.
Now, this may not be 100% of your troubles. Trying to use a resource hungry MIDI instrument plugin for example, might still cross the line for what your CPU is capable of. But the drive upgrade to a SSD would be the biggest piece of the puzzle. You'd at least have a capable machine again. It's no risk in that you'd keep that SSD if you upgraded machines down the road. You could work around CPU overloading by freezing/rendering tracks created with hungry MIDI or synth plugins as you made them if that was still a problem.
That machine may support 8GB ram. That could be a 2nd cheap upgrade. 4GB is more than enough for most audio work but some instrument plugins can use more. And/or you'd have more ability to multitask on the machine (as your OS permits).
Keep in mind that you should set your latency (block size) high (eg 512 or 1024 samples) for mixing. Only set it low for live work or live performance work like playing through MIDI instrument plugins while you record.
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