You shoud not be building on the 775 socket. It's completely dead. Intel's getting ready to move to it's 3rd socket since then (1156, 1366, then whatever i9s will use after the first couple).
How about we start over and build it all with the $1200? You can get a great computer with that. I don't know about monitors, so I'll build to a $1000-1050 budget...
CPU: i5-750 $200 ($150 if you're near a Microcenter)
Mobo: Gigabyte GA-P55A-UD4P $185. This is a newer board that has USB 3.0 and SATA 6 GB/s ports, so it's very good for future proofing. It's also reasonably priced, and has fixed the problems with overclocking on the Foxconn sockets.
Total: $988 after rebates, before shipping, taxes, combos. Assuming $200 i5.
If you're near a Microcenter and/or find a cheaper monitor, spend $100 extra for the HD 5870 ($410). It's a tight fit in the 300 Illusion, so you might want to get a little bigger case, but it should be alright...
There's an excellent build without using hand me downs...
That was some good collaboration. The only reason I picked the bigger spinpoint F3 was because the 500 GB was out of stock at newegg. Definitely go for the 500 GB one if you can get it when you want it.
I think that is the best build you could possible get for that budget. If you jump up to an i7, you have to drastically cut the video card, and will hurt the overall performance. If you drop down to an AMD build, you can up the GPU, but the biggest noticeable gain would've been to add to the CPU.
So this build is in the optimum spot. Any cut you could make to one component to improve another component will only hurt the overall build.