AMD processors do not have problem..I dunno what you mean, that AMD processor have many problems. I have been switching processor between AMD an Intel since 1997 and never had any problems from both worlds.
AMD has better offers for budget PCs while Intel is for those who really want performance and willing to pay more.
For up to USD300, you will get better built from AMD.
Going C2Q is also not bad, if your mobo can support it and if you can get a second-handed C2Q with very good price from eBay. Still, keeping that LGA775 platform is no longer worth the money.
If you have issues with your LGA775 PC, just let it go.
Do yourself a favor and get a newer processor, mobo, RAM, etc.
If you want to keep your PC for a longer time, I would recommend to arrange your budget until you can reach an i5. USD300 is kinda too low.