ShadowBoo
Terrarian
I wouldn't call your specs low-tier, but since 1.3, things have gotten pretty high in terms of requirements, especially Multiplayer. However, I am aware that people with very high specs have the same issue, and I've encountered it myself to some degree. Ever since 1.3, there's been an uproar on how people are lagging when using Multiplayer or in general. A lot of that has been fixed, and a lot of it has to do with specs.I play on 800x600 res, no multicore lighting, trippy lighting, no background and fullscreen, Parallax 0%, blood and gore off.
My specs are as follows:
Processor:AMD Athelon(tm) 64 X2 Dual Core Processor 5000+ 2.60 GHz
RAM:4.00 GB RAM (3454 MB)
OS:32-Bit Windows Vista Home Premium
BIOS: Phoinex-AwardBIOS v6.00PG
Graphics Card:NVIDEA GeForce 6150SE nForce 430
HP Model: s3401f
Other than waiting for them to patch it, there doesn't seem to be a fix other than messing around with Nvidia control panel to turn off V-Sync, going full screen, and other things. Google yields a good few suggestions, most of the time.
EDIT: Oh, and I'd upgrade to Windows 7 if I were you.