id get a i3 2120 CPU, p8h61-le/csm motherboard, gskill ripjaws x 8gb kit, a 6870 from xfx (154.99 after rebates) and you should get a seasonic m12II 520w psu. the old case psu s dont have enough power to power on the new components
well then get a new dvd drive. theres a asus one at newegg i think that is 16.99
you wont really need much other than to discharge the static electricity before you touch the components. to do so, just touch the metal parts of the case.
if you would like a new case, there are several cheap ones like a antec 302 or a rosewell challenger that have great build quality and features like USB3. older cases tend to use smaller fans that are really hard to find nowadays. in my dads old system he had those 80mm and 92mm fans. new cases come with 120mm fans which are quieter and move a bit more air