Yeah, I'm having the same problem, and I don't think it's my hardware...
I'm running:
Athlon 64 3200
1 GB Ram
Radeon 9800XT
Sound Blaster Audigy 2 ZS
Windows XP
I really wish I knew what the problem was so I can play this...
I've seen some major issues with ATI 98xx and AA in some games. Disable the FSAA and you will probably be able to play smooth as silk.