PLZ help choosing components for desktop upgrade

[blackup]

OK, so I've been rolling a PC that I built circa 2000. It has some OLD parts. Athlon 1.1 ghz, 133 RAM, Radeon 9700 pro, and so on. Its pretty funny actually because it is still running great, but I'm ready for some better capabilities for video and gaming.

Heres what I will be saving:
-22" 1680x1200
-audiophile PCI card
-2 Hard drives (raid)
-PCI wireless card
-ATX Case
-PSU
-Old CD-RW

So far I am looking to keep the budget near $300-400
heres what I have my eye on:

---CPU: E5200 (69$) or E8500 (190$)

---MB: ASUS P5QL Pro (87$)
http://www.newegg.com/Product/Produc...82E16813131329

---GPU: BFG NVIDIA GeForce 9500 GT 1GB (70$)
http://www.buy.com/prod/bfg-geforce-9500-gt-1gb-ddr2-128-bit-pci-e-2-0-directx-10-video-card/q/loc/101/208673391.html

---RAM: 4GB GSKILL (55$)
http://www.newegg.com/Product/Product.aspx?Item=N82E16820231166


questions:

1. Is this stuff compatible? It's been awhile since I have built a system and I have lost track of technology.

2. I know there is a big gap between the CPUs I listed. My reasoning, is that I would like to save 100$ and go with the 5200, but will the 8500 give me a big boost in performance? I like to game, but I don't need to be on the highest settings.

3. Here are my PSU specs: 380W, DCout 10a/5a, +3.3v(26a), +12v(18a), -5v(0.5a), -12v(0.8a), +5sbv(2a)
Will this need to be upgraded? If so, any suggestions for a budget solution?

4. Any suggestions for different components? Am I bottle-necking in a certain area?

A BIG thanks to anyone who will take the time to guide me through this!
On the record: I promise before and after pics

 

[blackup]

heres an update on what I might be buying, based on recommendations from others:

---CPU: E5200 (69$)
---MB: GIGABYTE GA-EP45-UD3P (135$ - 20$MIR= $115)
http://www.newegg.com/Product/Product.aspx?Item=N82E16813128358
---RAM: 4GB GSKILL (55$)
http://www.newegg.com/Product/Product.aspx?Item=N82E16820231166
---PSU: PC Power & Cooling Silencer PPCS500 500W (69$ - 10$MIR = 50$)
http://www.newegg.com/Product/Product.aspx?Item=N82E16817703015
---VGU: Galaxy GeForce GTS 250 (110$ - 40$MIR= 70$)
http://www.newegg.com/Product/Product.aspx?Item=N82E16814162029
--- HDD:Seagate Barracuda 7200.12 ST3500418AS 500GB 7200 RPM 16MB (60$)
http://www.newegg.com/Product/Product.aspx?Item=N82E16822148395

=419$
+fan/arctic silver

 

[eagles453809]

thats a good upgrade right there.

 

[Phoenixx45]

I have a 8800GTS for sale for $90 which is pretty cheap, here's my email if your interested:

racingcowboy17@yahoo.com

 

[blackup]

I bought everything listed in post #2 except I upgraded to the E7400, and for the VPU I got the EVGA 9800 GTX+ 512MB. I also snagged an ARCTIC COOLING Freezer 7 Pro fan, some arctic silver, a cheap DVD rw, and a cheap ATX case. Lets just say it came in a "bit" over my original budget.

Thanks to the good people of the Xtreme CPU forums for their help!