With a £50 budget, a
HD 6570 would probably be your best option.
It will be much, much more capable than a 5450, 6450 or 8400GS (performance should be similar to a 8800 GTS 640/320) and is priced within your range.
It is also quite low power, so you should not have any issues with your PSU.
As for the CPU, if you are on a budget, give it a try only upgrading the GPU first.
Many MMOs are not terribly high in the system requirements and you could probably get acceptable performance.
If it happens that your performance is unacceptable with the new GPU, a Core 2 Quad (or any Core 2 based CPU really) will offer you a massive performance boost.
Before you go out and purchase a new CPU however, make sure to post back your exact motherboard.
While it may be LGA 775, this does not guarantee that it is compatible with all LGA 775 processors.
We should first check if there is a BIOS available with support for which ever CPU you would want to replace the P4 with.