Your problem is that you have an old intel integrated graphics chip. It does not meet the minimum requirements for the game. The only way you are going to get the game to even run is for you to buy a graphics card. More RAM would also probably help, GTA IV can be quite a memory hog. If you want recommendations for a graphics card, post which power supply your system has, and how much money you are willing to spend.
Be warned that GTA IV won't run all that well on your system, even with a graphics card. It is a badly optimized game, and won't run well on a slower Core 2 Duo CPU like the one you have. If you want halfway decent performance in GTA IV, you may want to consider a new system altogether.