Hi,
With an alpha channel you may think you are subtracting info from the file, making a blank area with no video, thus making the file smaller.

That's not what is happening, what you are doing is saving an extra channel of information. The video is all still there, plus the alpha channel which is a complex animated mask basically. You are adding to the file size.

Think of it like masking a photo in flash. You have the complete photo and the mask movie clip adding to the final swf size.
You are doing that 29 times a second!

Is your audio mono, it should be. Try Mono, Frequency 44hz, bitrate 96.
You could even get away with going lower as its only talking, its subjective, you just have to try reducing settings until it sucks.

180 for a bitrate is very low, what is your max set to?
I would imagine you are using the max for that size.

Counter intuitively sometimes compressing too much is more of a problem than file size. If you are using 2 pass on your compression, try 1 pass. Increase your minimum and max bitrates. Sometimes it is the decompressing that causes the machine trouble, not the actual displaying of the video.
For example you may find a really high quality quicktime will play back smoothly on that machine, it is huge, but not very compressed.

Check out this site with your crappy machine, let me know what the "bandwidth" and "bitrate" text boxes above the video say. It is a test site for something I am working on.
http://www.gasolicious.com/OrangeUpload/index.html

Mark