Need Advice: Build from scratch or expand what I have

Hi Tom's Community,
I think I'm stuck in paralysis by analysis... I currently have a decent home computer. It's an HP business line workstation. My problem is the current configuration cannot play the latest generation of games. I tried to eek out a bit more use by upgrading the video card. Unfortunately, the HP comes with a 380w psu and the form factor does not support PSU upgrade.

My question to community is this... Should I try to build an upgrade around these components or just start from scratch? I have a budget of $500.

CPU: Intel Q9400 Extreme
Ram: 8GB
HDs: Western Digital Velociraptor 160GB x 2
Video: ATI HD 4250
ETC: I have access to 2 ATI 6770s for 45 each.
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