I'd upgrade the video card to a 320MB 8800GTS, even if it means downgrading the CPU to an E6420 to make the budget. A decent PSU will also be required - a generic 500W peak output is less than ideal.
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CPU: Core 2 Duo E6600 / MOBO: Gigabyte 965P-DS3 / GPU: Gigabyte HD4870
RAM: 2GB G.Skill F2-6400CL4D-2GBPK / HDD: 2TB Total HDD / PSU: Antec NeoPower 480W
Cheap PSUs - 2% of system costs, responsible for 28% of system deaths As Sealed Stick was removed, lost or damaged, it shall be out of warranty validity. - The "Warranty void if removed" sticker on numerous CoolerMaster PSUs.
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