Proximon and I were posting at the same time lol. I like the CPU he found, but it might put the GPU I found out of reach. If you went with that build, get the GPU I showed you. It is just a few bucks more and is worth the extra cash. If you can't afford both, then get the E5200 and the GPU I showed you, it will give better performance in games.
You might run into some crowding issues with the motherboard and video card - the video card takes up 2 slots. if you're not going to use the pci slots, then its not a big deal
I'm not a huge fan of ati, but from what i've read, its a pretty decent card, should perform well for you.
You will have a rough time finding a good GPU that isn't a dual slot. Its a fact of life, If you want to game on your PC, you will pretty much have to buy a dual slot GPU.
You won't have crowding issues, don't worry about it.