I play WoW a lot and I can tell from your system spec that your system memory and graphic card is what is really holding you back. You're running at a pretty high resolution and your graphic card is choking hard. If you're looking for a budget system and that can run WoW then here are the specs I recommend. I'm building a new system myself but my system is quite a bit more expensive then what I'm recommending you but let's face it. WoW is a pretty old game it's not going to push the graphic card envelopes but the system below will fit the bill very well and then some.
Antec 900 Case: Great case with awesome air flow. You can find this for much cheaper around the net. Only using Newegg as a reference point.
http://www.newegg.com/Product/Product.aspx?Item=N82E168...
Gigabyte P45 Motherboard: P45 chipset boards are quickly becoming the mainstream for Intel chips. Cheaper then the X series chips with most of the same features. This particular board will support Crossfire or two way SLI so if you ever want to upgrade to a second video card in the future then it will be ready for you. You don't have to get Gigabyte, the other board manufacturers back good P45 boards to. The feature you want to look for in a P45 board is dual PCI express slots. Most of the other features are pretty standard across all the boards. So pick the one that you like best. DD3 is a bit of a overkill for this type board so not a great feature to have.
http://www.newegg.com/Product/Product.aspx?Item=N82E168...
Intel Core 2 Duo E7300 Wolfdale 2.66GHz 3MB L2 Cache LGA 775 Dual-Core Processor: The E7000 series processors are a great price and overclocking potential is really high with this series. I would of recommended the E7200 instead but the prices for the two are exactly the same. Remember that this series process using the smaller 45nm die.
http://www.newegg.com/Product/Product.aspx?Item=N82E168...
OCZ Platinum 4GB (2 x 2GB) DDR2 SDRAM 066 (PC2 8500) Dual Channel Kit: Really good price right now for DDR2 memory. Prices are dropping big time. OCZ makes a good set but so do Corsair and others. Just make sure you find a good dual channel kit with low latency and timing.
http://www.newegg.com/Product/Product.aspx?Item=N82E168...
ASUS EAH4850 TOP/HTDI/512M Radeon HD 4850 512MB 256-bit GDDR3 PCI Express 2.0 x16 HDCP Ready CrossFire Supported Video Card: Why did I recommend the Radeon 4850 over the Nividia's? The 4850's performance is on par or better then the Nividia's 8800's and 9800's plus the pricing for the 4850's have been steadily dropping. Two 4850's in Crossfire configuration offers massive graphics power and is on par with a GTX 280. Will it help WoW? No, since WoW doesn't take advantage of Crossfire but it will kick ass in other games. Buy one now upgrade to a second later.
http://www.newegg.com/Product/Product.aspx?Item=N82E168...
OCZ StealthXStream OCZ600SXS 600W ATX12V / EPS12V SLI Ready Active PFC Power Supply: A 600W PS should be plenty for your needs. It will power most things and be able to juice up that 2nd graphic card when you want to upgrade. If you don't really think your going to go Crossfire or SLI then a 500W or 400W is good enough. I would go 600W just cause it's a good price point for power supplies and it still has plenty of juice.
http://www.newegg.com/Product/Product.aspx?Item=N82E168...
Not going to recommend any other parts cause everything else is up to your taste. Those are the core parts that will make or break your WoW system build.
Total Price Before Rebates: $657
Total Price After Rebates: $542
This system will give you all you need for WoW and more with the ability to easily upgrade for the future.