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i think many of Vista's problems that thwarted it's image in the first place was solved by those service packs. Since the image is already bad you'll still hear many ppl complain and waste it down. However it would still be a good bet if you want to run AW on it.
However your specs are a bit of a bare minimum so u might want to upgrade and do a cost analysis between that and the 360, along with the possible games you'd like to play in the future.
I was under the impression that Fable 2 is coming out for PC.

Personally I would take PC games over console games anyday.