Heyyo,
See if a 9800 pro is better, if lower? then try a 9600 pro or a fx5700. My 9600 pro works fine for hl2, I get some pretty decent graphics, but nowadays a 9600 pro is a almost tight budget vidcard. 9800 pro is budget, 6600gt is if you got some spare cash.. 7800gt if money ain't an issue.
Btw, for hl2dm, they diddn't port the damage scalings of hl1dm I think, it's definately tweaked bigtime, but in somecases it's good like the rocket launcher.