Looking for advice on this $500 gaming build

This will be my first build and I'm looking to keep it around or preferably less than $500. My main use will be gaming but I would also like to have an HDMI for video, although it's not a big priority. The screen resolution I plan on using is 1680x1050.

Here's what I am considering:

Motherboard:
ASUS M4A785-M AM3/AM2+/AM2 AMD 785G HDMI Micro ATX AMD Motherboard

CPU:
AMD Athlon II X3 450 Rana 3.2GHz 3 x 512KB L2 Cache Socket AM3 95W Triple-Core Desktop Processor ADX450WFGMBOX

Hard Drive:
Western Digital Caviar Blue WD1600AAJS 160GB 7200 RPM 8MB Cache SATA 3.0Gb/s 3.5" Internal Hard Drive -Bare Drive

GPU:
XFX HD-577A-ZNFC Radeon HD 5770 (Juniper XT) 1GB 128-bit GDDR5 PCI Express 2.0 x16 HDCP Ready CrossFireX Support Video Card

RAM:
G.SKILL 4GB (2 x 2GB) 240-Pin DDR2 SDRAM DDR2 800 (PC2 6400) Dual Channel Kit Desktop Memory Model F2-6400CL5D-4GBPQ

PSU:
Ultra LSP550 550-Watt Power Supply - ATX, SATA-Ready, SLI-Ready, 135mm Fan

Case:
APEVIA X-DREAMER3-BK Black Metal ATX Mid Tower Computer Case

I left out an optical drive because I plan on using an external usb dvd-r, is that a bad idea?

Would this be a decent gaming build for the price or should I just scrap it altogether? I don't necessarily have my heart set on anything so any advice on changing parts for better performance would be appreciated.

Thanks in advance.