Video Card expert needed + knowledge of mobo

Here are my computer specs:
Biostar NForce 3 250 AMD http://www.newegg.com/Product/Product.asp?Item=N82E16813138247
Athlon 64 3400+ 2.4Ghz
512Mb DDR Ram PC3200
DVD-CDRW drive
Nvidia Geforce FX5500 256MB 128-bit DDR Ram 250Mhz core 333 effective clock 400 Ramdac AGP 8X with excellent zalman cooler.

Nothing has been overclocked- all new parts and work well. Passes tests in all respect, the only thing is that Everest free edition says that I have more than half of video card ram than I do system Ram. Obviosly even though it doesn't say I have less than 512MB system Ram, it read it that way when it did the test. It mentioned that this could cause problems. I am curious as to how it could cause problems.

Lastly, I bought this game FETCH for my sister to play. But when she goes to play it most of the time the background flashes, and at times there are picture anaomalies when you go to open the ingame menu. I checked my video card temps and the thing was barely hot. Also I stuck Need For Speed: Most Wanted in there (which has more graphical demands) and it plays the game with no quarks for hours! So, my last two questions would be this: Is another component too hot? (80C* idle, 86c* on high load) ... CPU goes from 7 C* to 170 C* during idle (fluctuates- or faulty temp monitor..?) Or is this a software issue since the other game: NFSMW works fine? Within the FETCH Minimum Requirements it lists that I need a video card with T&L functionality. This is the only thing I'm cluesless about. What is this? Also at times my sister played her game for hours with no problems. After boot-up today, it starts acting up again? HELP ME OUT!! :cry