New system build or upgrade

Hi all. I just found this forum and am enjoying reading all that is here. There's just an overload of information. I see alot about building new and that's my question. I'll give you what I have now and what I'm wanting to do and see if you can give me some recommendations. Thanks!

Amd Athlon 64 3200+ overclocked to 2.2 ghz
MSI KN8 Neo4
NVIDIA GeForce gt 128mb
1.5 gb ram
Lite On DVDRW LH 20aih
realtek ac97
direct x 9.0c
350w power supply
Generic black mid tower case

The last game I played on it was CnC yuri's revenge. It played it fine.

I am wanting something that will play the new games like Cod4. I want it to be able to play on my 26 inch flatscreen and look good to great. After reading ALOT of stuff it appears that my cpu is slow and being that it's not a dual core it will suffer. My 128mb card is weak and something like a 8800gt would be good. I am also seeing I may need at least a 400w power supply. Is there any salvaging this system in a cheap way (300 bucks) , or should I just rebuild. I see that finding a dual core amd processor is rare and costly. I'm really not going to need much to be impressed. If I build my buget would be $600. All I need is to build a cpu. I don't mean to answer any of my own questions but rather verify some of what I've researched. Thanks!

Wait! there is still hope for your old-a$$ pc (J/K), just ditch the card and power and add another 512 of ram. the cpu is fine you don't really need a dual core for games since not many games are multi-threaded.

the mobo is good too as long as i has the pci-express.

make it 2gb of ram though and hurry before you never find the DDR 400 anymore.

i'd say an 8800gt should do it. just make sure you go to newegg.com

if you trust me im actually trying to get rid of an 8800gts 320mb that i have in its original box, its a good card for any game, i just dont need it anymore. $60?

530 watt Raidmax $45 is a good psu

your cost with my offer: $125

your cost with 8800gt: $200+