The latest release build series ... the 2017 ... is (by user reports, particularly Bill Gehrke's testing) optimized for 3rd gen SSD drives, and also ... runs a heavier load on the computer than previous versions. So, yes ... it's requiring more capabilities in hardware than the previous versions.
And that GPU, which would be involved with Lumetri ... first shipped in March of 2012. Nearly five years ago. It's not a particularly hot card by today's standards.
Next, the yellow line on a timeline panel only shows that the expected load might slow the computer in playback, not that the GPU is working.
So basically, you're getting better performance from the CPU alone than when the GPU is involved ... if it's possible, I'd look at getting a newer GPU though I'd go for a inexpensive one that's fairly recent, Nvidia if possible.
Here on the Hardware forum, you'll get the best advice on whether to upgrade or just budget for a new rig.
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that radeon HD 7850 is a decent card, and should be an ok match for your cpu. i would expect the amd gpu to be much faster to render lumetri using the amd video card than cpu only. have you tried disabling the intel graphics for your i7 cpu? sometimes premiere tries to use that, and it seems like premiere 2017 is attempting to use the intel graphics more than older versions. the intel graphics will be much slower than the amd gpu.
you could also download gpu-z and watch the gpu load %, to see if its using the amd gpu and what % usage its at while premiere is trying to render a lumetri clip. you can also watch the gpu memory usage, if its maxed out it could hurt performance too. higher resolution timeline/media will use more memory on the gpu, so if that amd gpu only has around 2gb, it might be limiting if attempting anything past HD/1080p.
i think there were some problems with some amd drivers too, you could try updating drivers or try some real old ones... if you didn't see this thread, there were a couple of different fixes that helped people getting premiere to use their amd video card. Adobe Premiere Pro CC 2015.3 with AMD graphic card