I'm running a 8400GS right now and it runs smooth as silk.
The CPU is more of a concern, but I'm pretty sure it will work. My system specs are almost the same though I do have a slightly better CPU.
Of course, I hope you're running XP. Vista and W7 are much more resource-intensive. And it's a good idea to shut down any unnecessary background processes and run strictly offline when using Trainz (i.e. disconnect from the internet, shut down anti-virus, etc.)