I have checked that the graphic card you have selected and the slot you have on the system are the same hence there shouldn't be any problems for you to upgrade the graphic card on the system. Since the connector on the board and the graphic card both are X16 PCI express. Hope this helps
I upgraded my XPS 8300 not too long ago so shouldn't be too much different. The case only had about 10-12 inches of room to fit the gpu (should be enough) and I believe the PSU in the 8500 is 460W which is the close to the bare minimum for running the GTX660 reference card. Before you buy, open up your case and take a look at the power supply to confirm the power supply wattage.
I also noticed that the graphics card you chose has the reference cooler. The xps case does not have the best airflow so i would recommend something with 2 fans to keep the card cool, the one below may work a bit better.