Processor: AMD Phenom II x4 940 BE Socket AM2+ 125W OEM
Price: $ 95.99
Notes: Pretty sure this part needs to be changed. I'm thinking socket AM3, and maybe something with lesser wattage. It should be powerful enough to handle 1080p and some games though. Possibly OEM, because I have the Heatsink and fan from my gaming build (I use liquid cooling).
HSF: Zalman 8700 NT Low profile HSF
Price: $ 39.99
Notes: Would this be required or would the stock HSF be good enough. I kept in mind that being a small chassis, heat accumulation would be more. However, I've never really used the stock HSF to be able to judge how they perform.
1) That motherboard only supports DDR2, no use for that, try...
2) Maybe try a 555BE, it would give you lower watts for now, and (maybe) add a core or two down the road. Otherwise a Regor for now and put your HSF on it for a mild OC, which should be beefier than what it comes with.
If you have a MicroCenter near you then pull one of their AM3 platform CPU + MB combos. The "entry level" MSI board is fine... An X2 560 with that MSI board will run you around $100 after rebate. Or the X4 965 is $160 after rebate.