What version can my older iMac handle?

I have an older iMac, late 2006, intel core 2 duo, 2GB ram, running Snow Leopard 10.6.8. It's the kid's computer and I'm having issues sharing numbers and pages documents from my iPad2. I've tried using dropbox and keep getting the same error message over and over again(missing xml.file) when I try open it from dropbox on the iMac.
Since Lion uses iCloud sharing I was wondering if the iMac i have can handle Lion.

OS X Lion 10.7 is the newest version of OS X you can install on that iMac and it's available from the MAS. OS X Mountain Lion 10.8 onward requires a post-2007 iMac..

Your iMac is capable of running Lion. It's memory could also be expanded easily to 3GB.

I,m wondering why I still keep getting the index.xml file missing when trying to open a numbers or pages file when sent from my iPad. Is it because I,m running Snow Leopard?
Will upgrading to Lion fix the problem? I've used Dropbox, I've e-mailed the file to myself and still get the same error message.

You are getting the error due to an older version of Numbers and Pages and not the OS itself. Only issue is depending on how new your IOS on the Ipad is, a version of IWork that will do compatible documents from the ipad might not install on Snow Leopard. I use Snow Leopard here with the last version of iWork that will run on it. I will check it with my iPad later and see what happens and report back.

Ok can you open Pages and Numbers on your Mac and click on About Pages and About numbers from the toolbar up top and post the exact version numbers?

I am running 10.6.8 here on a 2.16 Core2Duo Imac and Numbers 204 (184) and Pages 404 (614) and was able to send a pages doc and a Numbers Spreadsheet to my iMac from my iPad and both opened. My iPad is the 1st Gen though with IOS5 so maybe my versions of those apps are older than yours on the iPad.

I'm running numbers version 2.0(299) and pages version 4.0(727) and using an iPad2 running iOS 7.
10.6.8 here also.