What combo do I choose?, please help.

well first of all...what are you using this computer for? gaming? photo/video editing? daily tasks?

If you will be multitasking a lot, then I would opt for a quad core...if you are going to be gaming, then I would opt for a higher clocked dual core....

If you are just going to be doing daily tasks you have quite a lot of choices at hand,the E7400 is an attractive choice with it's 3 mb cache and clock speed however it does not support virtualization which is a huge downside considering that windows seven uses virtualization technology to run in xp mode,whereas all am2 chips and beyond are capable of handling virtualization well and cost less,thus if i were you i would spend the money on a phenom 2 x2 550 (it has the best price to performance ratio of any dual core as it comes with 3.0 ghz,6 mb cache and it is based on the successful phenom 2 technology) it is very cheap (even cheaper than the slower E7400) and it is backwards compatible with am2+ motherboards as well thus you do not have to spend the extra cash on ddr 3 (although it is a good idea) thus you can stick with ddr 2 800 or 1066. Moreover i prefer the am2+ chipsets like the 780G or the 770 to the g31 (if you go intel you should stick with the p45 chipsets anyway) all in all you would get a great cpu that will be fast enough and have enough cache to handle all your everyday task but also give you a lot of overclocking options should u decide to dabble into overclocking in the future (it is a black edition so overclocking it is very easy)....oh and PLEASE stay away from the phenom 1 chips,they run hot,don't oveclock well and cost more than some better options out there...stick to either phenom 2 or the newer athlon chips......the intel build you have in mind isn't bad,but the amd build based on the phenom 2 x2 550 would outperform it and provide virtualization technology should you decide to upgrde to windows seven in october.

So this is the cpu. Is it really AM2+ compatible? Because I can't find any good AM3 motherboards.

AMD Phenom II X2 550 Black Edition Dual Core Processor Socket AM3 3.1GHZ 7MB Cache 80W Retail Box

http://www.directcanada.com/produc [...] acture=AMD

Greatly appreciated.

well im not sure if ALL am3 chips work with ALL am2+ mobos...this is definitely something the OP should look into...but I'm pretty certain that any new mobo, specifically one with a SB7xx series southbridge, should work fine with an am3 chip...

The reason I say this is because when I was looking to upgrade my cpu to a Phenom II, I found out that my Biostar mobo doesnt support the new am3 processors...my mobo has the SB600 southbridge rather than the newer SB700s

if its an ATX case, then it should be compatible with any ATX mobo...just make sure that the case has space for appropriate cooling fans...