Updating a BIOS is relatively easy, just look in your motherboard's user manual, there should be instructions on how to do it.
Changing a CPU isn't tough, but can require some time. Depending on your casing, you might have to remove the whole motherboard to get enough room to change the CPU and that can be the complicated/timely part. Other than that, you just have to release the HSF retention mechanism, remove it, release the CPU retention mechanism, remove it, put the new CPU, set the retention mechanism, put the new HSF, set the HSF retention mechanism. It can take about 15 minutes for someone with experience. If you are reusing the same HSF (make sure it is good enough for your CPU), you might have to clean the base and apply new thermal paste.
For a new system, just put a new post on the "Homebuild" forum and people will give you tons of suggestions. Just tell them what you plan on doing, what components you currently have (some could be reused to save some $$$).
For your needs, something like a 5200+ (60$) or 5400+ (70$), a 780G MB (80-90$), 4GB RAM (35-50$), a good PSU (70$) and, if needed, Vista 64 Home Premium (100$). So we are talking ~250-280$USD without OS and ~350-380$USD with OS. Not sure of the UK prices, but this gives you something to start from in the homebuild forum.