Don't get the x4 635, it only has 2mb L2 cache. The i3 540 is way better than it, and even though its only dual core it has 4 total threads for multitasking. For gaming tho, I think the x2 555 will be your best bet, considering it fits in well with your budget too.
how about this,
Newegg.com - AMD Athlon II X4 635 Propus 2.9GHz Socket AM3 95W Quad-Core Desktop Processor ADX635WFGIBOX
+
Newegg.com - GIGABYTE GA-MA770T-UD3 AM3 AMD 770 ATX AMD Motherboard
Newegg.com - G.SKILL 4GB (2 x 2GB) 240-Pin DDR3 SDRAM DDR3 1600 (PC3 12800) Dual Channel Kit Desktop Memory Model F3-12800CL9D-4GBNQ
Newegg.com - Western Digital Caviar Blue WD5000AAKS 500GB 7200 RPM 16MB Cache SATA 3.0Gb/s 3.5" Internal Hard Drive -Bare Drive
Newegg.com - Antec NEO ECO 520C 520W Continuous Power ATX12V v2.3 / EPS12V 80 PLUS Certified Active PFC Power Supply
Newegg.com - ASUS Black 24X DVD+R 8X DVD+RW 12X DVD+R DL 24X DVD-R 6X DVD-RW 12X DVD-RAM 16X DVD-ROM 48X CD-R 24X CD-RW 48X CD-ROM 1.5MB Cache SATA 24X Burner LightScribe Support - CD / DVD Burners
Newegg.com - Thermaltake V3 Black Edition VL80001W2Z Black SECC / Plastic ATX Mid Tower Computer Case
totals to about $387
however on the case, if you/your friend can't decide what to go with for all the internal parts, i would suggest to atleast get this case that BiG listed, it's great for the price (only a 48hr sale)
The psu isn't bad... You can get a 550W Newegg.com - Antec BP550 Plus 550W Continuous Power ATX12V V2.2 80 PLUS Certified Modular Active PFC Power Supply
This ones got 3 rails for about 58Amps
Hmmm all these PSUs have 2 -6 pin connections for the GPU right? How much does say a GTX 470 require amp wise from a 12V compared to a 9800 GTX+?
I have that case. Wire management could be better, but it cools well and looks great.
$10 more will get your a WD Black 500GB drive, though w/free shipping.