Yes, Guild Wars is one MMO that comes to mind. Although you need to buy the software, you don't have to pay any subscription fee. Level is capped at 25, but it depends on how you build your character. If one build doesn't suit you, you can just change it in town later. I have seen a good built level 2 player overwhelm a poorly built level 25 player. That's what you call balance. You also don't have to level grind since levels is not what makes you powerful, but the way you combine your skills. It runs very smoothly on my old machine (intel P4) so it's not a resource hog. And it has a decent story that you can start and finish. So let's check:
*No subscription fee - check, but you have to buy the software and it's free to play for life.
*Good Character customization - check. You can actually strip down the avatar into their underwear. Nice if you have a female character and you type the command /dance
*Not pay to win - check. No items for sale, just pure skill.
*Good Story - check. You go through quest to unravel the story. You are in fact part of the story.
*Easy to play with friends - check. This is an instance dungeon. So if you party with a friend, you only see your friends in the map. No PK during a quest.
*Good Battle system - check. Like I mentioned, you can combine several skills to make awesome attacks. How else can a lower level player pawn a high level player?
*Minimum level grinding - check. You level up easily and max level is capped at 25.
*Not an FPS - check. You can actually see your avatar.
*Compatible with average computer specs - check. My old PC can run this.
I'm also playing Ragnarok Online. It's very old, but still very popular, probably around 5000 players each time I log on. Nice graphics, with set skills. This doesn't fit into any of the category mentioned above because of the following:
-It may be free to play or with subscription depending on what region you are on.
-The only customization you can do to a character is the head gear.
-There are some Godly items that you have to buy in order to be uber powerful.
-Sub par story if you count the quest. If not, no story at all. (And to think that this game is based on a korean Manhwa)
-Easy to play and easy to get killed if you don't have good skills and reflexes. If you're a noob, you'll get killed a lot.
-Battle system is a simple point and click, with the occasional keyboard presses to spam nerfing skills.
-God awful level grinding. Took me years before I was able to reach level 99 just so I can revert back to level 1, to reach level 99 again. Took me weeks to level from 100 to 101. To this day, I have yet to reach the maximum level of 150.
-Well, it's not an FPS, so I guess you might consider this its plus point.
-It's old, so I doubt there is any system that can't run this game.