You are on the borderline where blu-ray playback might be tough, as a slower dual core doesn't quite cut it. Getting a new video card that can accelerate H.264/VC1 playback would be helpful in making sure that your processor is offloaded and should bring you up to snuff as cheap as possible.
Remember you need a HDCP capable card & monitor/tv if you want to watch blu ray movies over dvi or hdmi.
Assuming you don't want to game at all with this PC then you're in luck as a cheapo ATI 3450 will be perfect for you.
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