Here's a decent setup if you're not a gamer.
AMD Athlon X2 7550 Kuma - $49.99
Kingston 2GB (2 x 1GB) DDR2 800 - $30.99
GIGABYTE GA-M61PME-S2P - $52.99
Total - $129.47
Add in tax and S&H if you order online and you should be around the $150 mark. If you have an extra $20 you should upgrade to
4GB ram and that should more than meet your needs. You would also have a bit of upgrade room if you should need it in the future.
I can't find any info on what PSU you have but if it's at least 300W you should be fine, unless you add a video card then I'd say you'd want at least a 400W PSU.
Unfortunately, after a little more searching, it looks like your PSU is only rated for 250W so unfortunately it looks like you're going to need a new PSU too!