Premiere PRO CS4 really slow when playing back AVCHD

I'm trying to edit some AVCHD (full HD 1920x1080p) but the playback in Premiere PRO CS4 is really really slow. The quality is set to Draft and even resizing the window to 25% keeps it slow.
So I decided to give it a try upgrading my computer. But... what should I upgrade to improve playback and edit my videos smoothly?
I have this PC specifications
- DualCore AMD Athlon 64X2 6000+ (3.0 GHz)
- 2 GB RAM DDR2-800 (Kingston)
- 1 TB WesternDigital 7200 rpm Hard Drive
- nVidia GeForce 9800 GT (1 GB Ram)
Any recommendations would be appreciated.

I need to admint that I made a huge mistake when I got the HD camera in my hands and I started shooting and watching it on a HDTV and it was nicely recorded. But oh surprise!, when I tried to watch it and edit it on my computer it was a nightmare.
Yes, that was what I was alluding to earlier on. It seems to be a good format, but requires an investment in gear to smoothly edit it. I almost feel that there should be a warning label on all cameras, that use it. At least it IS editable, unlike some other formats.
what a nice I/O sub-system article there, thanks for that
I agree, and that is why I try to tell Harm "thank you," whenever I can. He actually did three along the same lines. This was #1, IIRC, with a more generalized followup on the hardware beyond the I/O, and #3 was his setup details for 64-bit OS. All three are well worth reading. He put a lot of time, thought and effort into those. First thing that I did was publish links to each on several Video production fora.
Good luck, and please let us know how your new rig handles the AVCHD material. Before you get too far into things, Harm's other two articles might be of use too.

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