what do you mean it cant play HD videos? As long as your monitors resolution is 640x480 and your gpu supports that (which it will) then you should be fine, 640x480 is classed as HD btw, if you mean full HD (1920x720+) then your looking at blue ray which youll need a blu-ray player (but not if the video is downlaoded)
also if you want, I'm sure theres a few people here who could suggest hardware upgrades with what rig you have atm, the main thing we need is motherboard, gpu, cpu and ram