That looks like a pretty solid build. Everything should fit, but make sure you have enough power. 500W is good, but just check everything, then add it all up (add 50W or so to be safe) and then round up to the nearest power supply. to answer your questions
C) no, Your motherboard is what the decides how much you can upgrade. Your current motherboard seems sufficient for your current set up, but you won't be able to upgrade to 3rd gen intel since they need Z77 instead of P67/68. Also since the motherboard is pretty cheap you may not want to get anything past a non-overclocked i5. Keep this in mind since replacing your motherboard is like getting a new computer. Also if you get Windows 7 OEM version it will bond itself to the first motherboard it's installed on so you will need a new OS too.
Hello everyone, i have a bit more funding now, so around £550 instead of my original £500. Here is the set up i have worked out with the more future proof mobo and a beefier power supply after taking some advice. However should i spend it? on a better gpu or a better processor and so take a longer run approach?
Mobo - Asus P8Z77-V LX Motherboard
CPU - Intel i3-2100
RAM - Corsair CMX8GX3M2A1333C9 XMS3 8GB
GPU -Sapphire HD6850 1GB GDDR5 Graphics Card
HDD -Western Digital Caviar Blue 500GB SATAIII 6Gb/s 16MB Cache 3.5 inch
OS-Microsoft Windows 7 Home Premium with Service Pack 1, 64-bit
PSU- OCZ OCZ600MXSP-UK ModXStream Pro 600W
Sony 24x Internal DVD Rewriter - Black - Sony
CiT Vantage Midi Mesh Gaming Case with HD Audio, 4 Fans, Card Reader and No PSU - Black - CiT
I was thinking either a i5 2400 for the cpu but can't decide between AMD or Nvidia for the GPU
Any help would be much appreciated