Here's an explanation of V-Sync (Vertical Synchronization):
http://www.tweakguides.com/Graphics_9.html Your video and audio drivers are a year old. It might be advisable to update them.
I forgot to ask you what version of Caesar IV do you have? 1.0? 1.1? 1.2? You should have 1.2 if you don't. If you have an older version you'll need to get the update patch. The only place you can find it now is at a site like Caesar IV Heavens Games.
Close applications that you may have running on your system such as screen savers, virus scanners, desktop themes, animated cursors, etc.
To prevent extra applications and services from loading during startup please use the steps below:
-Click Start button then Run
-In the box type MSCONFIG and click OK.
-Select the Startup tab and then click Disable All button to uncheck these items.
-Click OK. When you are prompted to restart, click on YES.
-Upon reboot, your startup applications will not start, please try running the game.
To undo the above changes: -Click Start then Run
-In the box type MSCONFIG and click OK.
-This will bring up the System Configuration Utility.
-On the general tab, click the dot next to Normal Startup.
-Click OK. When you are prompted to restart, click on YES.
This will restart your computer with all the background applications re-enabled.
If the lag goes away with the startups disabled, it means that one of them is the problem.
To figure out which one it is you have to re-enable one startup at a time, reboot, then try the game. If all is well and there is no lag, return to the MSCONFIG Startup menu and re-enable one more, reboot, and try the game. Just keep repeating that until you either finish re-enabling all the startups, or until your lag problem returns.
If the lag returns, it means that the last startup you re-enabled is the culprit.
You may find a program that your mouse is using on the startups list. I would try disabling that one first.
To return everything to normal just follow the UNDO steps listed above.