Upgrading PC For Gaming $500 Budget

Hello all. Im trying to decipher exactly what it is I am going to need to upgrade my computer to play Skyrim on high quality settings. Im very new to upgrading computer hardware so Its become a little overwhelming for me to worry about compatibility and all that kind of stuff so I would greatly appreciate some help on what I should be purchasing. To be clear I want to get as much gaming performance out of these upgrades as I can for around $500. Im willing to go a little over if it means a major jump in performance or if this is just unrealistic. I will upgrade to Windows 7 64 bit if recommended (will have to if i want more RAM). If at all possible I would like to keep the mobo and just upgrade processor, ram, and graphics (and power supply). Can you guys please help me out with what I need, which components are ideal, etc. And thanks in advance for everyone's time.

Heres Skyrims Requirements:

Minimum System Requirements

* OS: Windows XP, Vista or Windows 7
* CPU: Core 2 Duo 2.0 GHz or Althon X2 2.0 GHz
* RAM: 3 GB
* HDD: 15 GB
* Graphics: 512 MB card
* Sound Card: DirectX 9 Compatible
* DirectX: Version 9.0c

Recommended System Requirements

* OS: Windows XP, Vista or Windows 7
* CPU: Core 2 Quad 3 GHz
* RAM: 3 GB
* HDD: 15 GB free disk space
* Graphics: 512 MB Graphics Memory
* Sound Card: DirectX 9 Compatible
* DirectX: Version 9.0c

And Heres my specs, PC is a few years old its a Gateway FX7020 with a swapped graphics card right from retail:
OS- Windows Vista 32 bit (will upgrade to Windows 7 64 bit. Any super cheap places to get it?)
Graphics- ATI Radeon HD4850 512mb
Mobo- ECS MCP61PM-GM im not sure if it is compatible with only 4gb or 8gb like it says here but this is my exact mobo, just not e machines http://www.e4allupgraders.info/dir1/motherboards/socket...
Ram-x2 512mb DDR2 and x2 1gb DDR2 For a total of 3GB Ram
Power Supply- Delta Electronics DPS-400RB A 400W
CPU- AMD Phenom 9600 Quad Core 2.3ghz
HD- Western Digital WDC WD5000AAKS-00YGA0 500 MB 7200 RPM


This is the txt file from System Information For Windows if you want it. (Its massive but its only the hardware section)
(never mind it wouldnt post with all this text in here, and i cant seem to attach a file)

Thanks again, sorry if I left anything out im still very new to this.