Yes you are fine. Graphics card memory is not directy controlled by the motherbaord or the CPU, but a controller built in to the graphics card. While your board supports only DDR2 system memory, the graphics card can itself support up to GDDR5.
Now your board's PCI-e x 16 slot is 1.1 specification. Its an older standard, but most of the video cards on the market will be backwards compatible. Some video cards do require a 2.0 or higher specification though so make sure that the card you want is backwards compatible with PCI-e x16 1.1 specification.