A diablotek 500W PSU? Not a chance. As crowe mentioned a good 500W PSU should be fine. Without knowing who made your PSU I wouldn't say if it could handle the GTX260 or not.
$90? Where are you getting the GTX260 for $90? You could probably find a 5770 for around $90 after rebate. If you don't mind buying used the 5770 and even the GTX460 have started to hit $80-90 on the used forums.
I am thinking about buying a gtx 460 1gb Sonic Overclocking Edition. Used that is, for $110. But My CPU (AMD Athlox 64 X2 4400+ 2.3GHz) is so bad, i heard it limits the full potention of the GTX 460