Help with LION/MOUNTAIN LION

I really need help with this. I just got a Macbook MB404ll/A from ebay, and it came loaded with OS X 10.6.8. I wanted to upgrade to Mountain Lion via the App Store but couldn't because this computer does not meet the graphics card requirements.... x3100.

The reason I needed ML is for the lastest Xcode. I want to learn to create Iphone Apps.

Anyway... the only Xcode I can currently run is Xcode like 3 which is very outdated.

I can't get Xcode 4.2 for Snow Leopard because you need to be a PAID developer which is so costly!!

Is there anyway I can get an up to date version of Xcode? I also tried to look for 10.6.8 to 10.7 Lion but there was no downloads for that?