Your CPU is obviously going to be a bottleneck, but to get a better one you really need a completely new motherboard and thus new System RAM etc. Basically most of a new PC.
As for which graphics card, that depends on two factors:
1) Budget, and
2) Your CPU (to prevent bottlenecks)
If rebuilding a PC is too expensive currently, I suggest you get something like the Asus GTX750Ti as anything more is likely to be bottlenecked by your CPU completely.http://pcpartpicker.com/part/asus-video-card-gtx750tioc2gd5
If you do rebuild your PC I suggest you get something more like THIS:
1) i5-4570 Intel CPU ($190 USD)
2) 1150 motherboard ($100+, I like most Asus boards)
3) 8GB DDR3 memory ($65 for a 2x4GB G. Skill 1600MHz kit)
You're looking at about $550+ depending on the graphics card you choose.
I assume you're following Steambox slightly and plan to dual-boot STEAMOS + your Distro at some point?