What is wrong with this setup

I have a dell laptop that has been struggling lately to do just about anything and everything. Attempting to play games results in vicious and non-stop lag that is originating from my system and not the game. Online games like WoW or Eve are near impossible to enjoy, my system startup takes over a minute when it used to be much much shorter, and i constantly run into display errors in which colors become muted or even distorted. I use my parents PC sometimes to get away the loud fan noice of my inspiron 9100, and their's is running so much more smoothly then mine with nearly an identical setup. I even loaded up Eve online to see if there was a difference and there is and it is phenominal. What is wrong with my laptop setup and why is a POS $800 tower able to do it better?

laptop:
Dell Inspiron 9100
intel Pentium 4 CPU @ 2.80ghz
512MB PC3200 DDR Memory
ATI Mobility Radeon 9700 128mb (omega drivers)

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I would assume that since you are getting 'display errors', that possibly it indicates a fault with either your graphics card, or the drivers for it.

Do you also have onboard graphics capabilities??

i run my adware program not as often as i should, but often enough, and though i do notice an increase in internet performance, my general system response is still sluggish.

I have onboard graphics capabilities, if you want to call it that, but they are rudimentary at best, with no support for native resolution and random blackouts during game play. I have tried using ATI sanctioned Catalyst drivers, but the install always gets an error and does not complete.

Has this setup ever worked as intended??

And is the onboard graphics turned off in the bios?

Exactly what does the error message say, during install?

[edit on 6/21/2006 by Mechanic 32]

The very first step I usualy take in this situation is go to START then RUN and type MSCONFIG. Then click the STARTUP tab and UNcheck everything. None of it is system needed, and all of it is reversable. So you can always go back and change it. Anyway, pressy Apply then OK then restart your computer. Then see if its still acting up.