Your computer really skirts the lower edge of minimum requirements (and the chipset doesn't reach the minimum requirement level).
That said, it may be possible to play. But, several cautions:
Sims2 isn't particularly designed with laptops in mind, so heat will be a major issue, and could over time damage the computer. Since the crash is happening while the computer is working extra-hard (configuring the internal files of the Sim(s) you created to be residents of the 'hood), it may be heat-related or just a lack of resources, if you have anything else non-essential running on the computer.
Vista will gobble up about half of your reported RAM all by itself, but the remaining RAM should be okay for playing so long as you keep lot and 'hood decorations on the lesser side. In neighborhoods, if there are a lot of trees, for example, remove a goodly chunk of them.
Sims2 and duo-core processors can be problematic. You might try resetting the affinity for the game to non-duo-core. See here:
http://www.sims2wiki.info/wiki.php?title=Game_Help:Dual_Core_IssuesWould suggest you make sure that anything other than Vista which is running in the background be turned off before attempting to play Sims2, as well as raising the feet of the laptop by putting something beneath them which does not also block the vents of airflow underneath the machine. This includes disconnecting from the internet and also (only after disconnecting from the net) turning off any anti-virus program you may have. Also would suggest disabling Windows Defender (it is not a particularly useful thing to have enabled for most Vista users anyway and just eats up resources which could be better available for other applications, IMHO).
Next, temporarily move your Downloads folder out of the game and see if the same problem replicates. If NOT, then put the Downloads folder back in but take out (again, temporarily) about half of the contents of that folder and see if the problem reappears. If SO, you'll just have to keep the contents of the Downloads folder on the skimpy side.
Would also suggest going into Graphics Options when in-game and reducing the graphics load of the game in general. Turn off shadows, turn off reflections, and if anything else is set at High, try knocking it back to Medium.
Last, installing updated drivers for the chipset might be of help:
http://www.intel.com/support/chipsets/sb/CS-022768.htm