I had the latest and greatest driver from nvidia and was unable to run the game without it freezing and crashing also. Like yours, my PC is also well within the requirements. I ran across this thread by WarX and gave it a try: http://forums.civfanatics.com/showthread.php?t=137370 I had to revert...
http://www.nvidia.com/object/winxp_2k_81.85.html
Uninstall old driver - Reboot - Install New Driver
Make sure you have a copy or disk containing your old driver should you decide to revert back to it for whatever reason.
Good luck.
I reverted back to the original driver (ver 61.93) for my Nvidia GeForce FX 5200 (128MB) and it apparently cleared up the hanging and crashing issues I was having. I don't know if this helped, but after the driver install I left the color quality at 16 bit, changed my resoultion back to...
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