well considering the original GTA3 will run at max settings 16/12 2xaa and 8xaf super smooth on my rig it should play good on yours I'd reinstall and maybe the drivers to.
This may be a stretch but.. try changing the Audio Hardware setting in Options to something else. I used to get servere slowdowns when I hit objects like poles and fences (and certain sounds were triggered), until I changed it to Miles Fast 2D Positional Audio.
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