Hola!
 
I am using the Asus A7N8X AMD Mobo.
 
Currently I have:
(2X)  512MB PC2700 DDR RAM 333mhz
AMD AthlonXP 2400+
 
I need to get a new computer for the wife, so I am most likely going to spend around $500 bux for her at Walmart or something.  This means no new gaming rig for me .  I have had my falcon-nw since 2003, and the only thing that I have upgraded is the Graphics Card.  So, needless to say, I need to upgrade my system big time.
 
I am wondering how fast a processor I can plug into the current mobo, and what RAM is compatible?
 
Thanks in advance,
Canyon

Sadly for the price of a new proc, and RAM you could upgrade.
(both are seriously outdated)
 
MB: http://www.newegg.com/Product/Prod [...] 6813135075
         ($80, out of stock on the Egg, but try other e-tailers)
CPU: http://www.newegg.com/Product/Prod [...] 6819103735
         ($50, not screaming but still better than the XP 2400+)
RAM: http://www.newegg.com/Product/Prod [...] 6820208283
         ($37, cheap but should still do well)
 
or if you are set on just the CPU, and RAM:
 
CPU: check eBay for a 3000+ barton (saw one for $180)
RAM: http://www.newegg.com/Product/Prod [...] 6820231039
         ($72 if you really wanna go this route)

hmm..., throw the guts away and go with the cpu + DDR2 ram + mb for best results, but your OS might complain and require a reinstall and/or new licence, activation, etc. so allow $$ for that as well.
 
If you stay with the current board, get the processor and maybe one more 512 DDR 333MHz stick.  This would be the cheapest way to go for some gain, but it wouldn't be my choice.  Don't bother tossing out the existing 512 sticks and replacing them with 400MHz sticks because you won't notice the difference (is the board limited to DDR 333 or 400? don't know, but doesn't matter, stay with 333MHz).
 
The A7N8X is AGP (booo) while the board IHU8 is PCI-E (yay!) and on-board video HD3200, but do you already have a decent AGP graphics card from the existing system?  Hopefully not, so later you can get a 8800GT512 or something.

There's absolutely no point whatsoever in upgrading that computer of yours aside from keeping the case, power supply (depending on the model and your needs), optical drive and hard drive(s).
 
Something like this will offer far better 'bang for the buck':
 
Gigabyte GA-P35-DS3L - $90
 
Pentium E2160 - $70
 
with 2GB DDR2-800 ram for about $40 and a PCI-E video card. If you're on a really tight budget, the Geforce 8600 GT can be found for about $75. You might also be able to find a good bargain on a card like the 7900 GS or Radeon X1950 Pro but they're quite hard to find these days. The Radeon 3850 and Geforce 9600 GT are both ~$150 but are much better performers. The CPU will overclock to ~3GHz on the the included heatsink/fan if you're into OCing.  
 
For ~$350 you'd have a system that can run games like Crysis quite nicely and you'd have tons of room for upgrades in the future. That board can take all the latest 45nm quad core and dual core processors for a later upgrade, and upgrading to 4GB ram would be dead easy as well.

You should give your old system to your wife and build yourself a new one.