7200RPM is absolutely necessary to be rid of that bottleneck, first and
foremost. A 5400RPM imposes a practical limit to the minimum size of the
buffer, and from experience this can be as big as 256 (meaning anything
lower you get xruns regardless of how good your audio interface is). WD has
a 320GB 7200 mobile disk going for around 100 bucks.
Secondly, the CPU. This is important because the lower the latency, the
harder the CPU works. As such, if the headroom is not big enough, you find
that even a little bit more CPU usage deals a heavy blow. I'd recommend at
least a 1.8GHz Core 2 Duo, which is pretty standard these days.
Overheating is an inherent hardware problem that comes with age. I bet your
battery capacity has decreased as well. And a 7200RPM disk will output more
heat, so get a flatbed cooler if the laptop's underside design isn't good
enough to compensate.