If those are the Xeon's that I think they are, they're only single core/single thread CPU's, anyway, so they're nothing special (basically like a single dual core CPU). That combined with the fact that they're very old and slow doesn't help matters.
Also, the GPU is pretty terrible too. A 5450 is pretty near the absolute bottom of the barrel.
I tend to agree with Christian, though, that the whole system is just having issues with Win 7. It was never meant to be used with Win 7. Go back to XP.