First, I will say what you're running and what you're opening could have an extreme impact on the perceived time to open applications and will also have impact on what you need to upgrade, or if you need to upgrade a component. Ctrl + shift + Esc, and open the resource monitor and keep it open while opening those applications to see what the memory usage is like - it is most likely the culprit.
Biggest Bet
In general, based on your specs, upgrade:
- RAM
I'd suggest 4GB for your system. Unlike what others have said, 4GB can be used in a 32b system. If you want to test out a 64b system for free you could download one of the Linux distros (e.g., Ubuntu).
Why not HD?
Unlike what other users have said, you do not need to upgrade your HD. Granted a 2009 5400RPM HDD is a little dated, but sometime around then many 5400RPMs were performing the same or better than 7200RPMs, so it is a matter of manufacturer. I've "invested" thousands in SSDs for many many years now and yes, while they will speed up application loads and boot times, you are experiencing a lag that will exist if you get one. Also, SSDs are still expensive than getting another stick of RAM.
What else could it be?
For 1, if you're running antivirus or other background applications/service, they could certainly be consuming memory (and CPU cycles) that you may desperately need. Furthermore, applications like Photoshop and video games may need a considerable GPU with a decent proc and GDDR, so yes, upgrading your video card may also help performance.
Also, over time, parts go bad, especially when they've been exposed to extreme heat or cold. That means that the RAM you have could have bad blocks, as well as the HD. So there is the possibility that you might need to upgrade one of the other components in addition to giving it some more temp memory (RAM).
Lastly, one thing you should do is open up that case and make sure to use some compressed air to blow out dust. Dust is bad for the computer as it could bridge paths on the motherboard that should not be connected. Due to failsafes, many times the computer will still operate, but slower, eventually leading to overheating and a crash. Regardless, your computer is an engine, and like a car it should be maintained.
1It may be your HDD limiting cause of memory swapping to disk (cause 1GB is quite low for Windows 7, my 32-bit machines usually are taking 1-2 GB without anything running) but it could also be any other problem (the lagging mouse pointer seems strange), especially faulty drivers – th3falc0n – 2014-08-10T12:37:28.063
On the short term, I'd suggest getting a small USB drive and experimenting with readyboost. It helps in some scenarios, and may take some of the load off your system. I'd probably do this in addition to the hardware upgrades suggested. I'd add that getting parts for older system is a pain unless you can find somewhere that sells refurbs or pulled parts, and you may have to do that for a ram upgrade. Memtest may be your friend here if you end up with a dud stick – Journeyman Geek – 2014-08-10T13:01:58.730
Buy SSD and forget about all that "readyboost" nonsense forever. If you can't afford to get a big one, look for a 32-40 GB model. It should be relatively cheap and will fit WinOS and a few essential apps, like MS Office and whatnot. – user1306322 – 2014-08-10T13:22:12.240
Note that the DG31PR uses DDR2, not DDR. Obtaining DDR2 RAM should not pose a problem.
– a CVn – 2014-08-10T13:46:25.823