You should be fine with your captured footage on the same drive as the preview files, I am. It is better however to have a seperate drive dedicated to video editing with your OS on its own drive (not logical partition). If you only have one HDD consider getting a second, their dirt cheap
As far as your processor goes it should be fine, I used an AMD xp2000+ to run premier pro and it was fine, I did have a gig of RAM though.

Premier does'nt really use your graphics card at all (unless its a dedicated capture/edit card- like canopus etc) as all the effects/encoding etc are handled by the processor.

tonga