Hello!
Regarding LAG, try the following:
- go to settings menu in game and check if the settings are maxing out the GPU memory. if they are, tweak till u find a setting that fits in ur GPU mem.
- if the settings are GREEN, and the game still lags, then its either outdated vga drivers, effect of OS on performance, etc.
- in the end if all else fails, do a clean install with the LAN/Network cable disconnected.
on a side note, the 'bugs' that teh othersve mentioned are issues that the game has if it detects its been cracked etc. thats why a clean install is recommended.
Hope this helps!
PS: a 9800 GT XFX 512 mb is more than effecient to run GTA 4, even wid a C2D processor (I did!) albiet in medium settins.
Cheers!