Oem systems with original windows installations will require a new windows coa unless you've already upgraded to windows 7. I would just get a better power supply, such as antec or corsair, and a better video card for now. You'll need at least $500 for an Intel upgrade when you have the money. Ivy bridge is almost here. I would list your games for a video card recommendation.
I'm not a gamer, so I can't comment about your game but I've seen alot of posts about piecemeal upgrades to recommend against them. You may actually be better off selling off your original hp system and windows installation and transferring your new video card and power supply to a new build when you have the money saved. If you decide to do this, be sure to create a backup dvd of windows so you can wipe the drive and do a fresh installation first. I'll reply to keep your post near the top and hopefully someone else will chime in on your game performance. How much do you want to spend on the card and power supply?