Wish list details
1) If you're really not overclocking, then yeah I guess you should ditch the heatsink but not overclocking a Core 2 Duo just isn't worth it. I would keep the 19", change the HSF to a Scythe Ninja/Tuniq Tower and overclock it. Just read a couple guides, shouldn't be too difficult. You don't have to max it out balls to the wall or anything.
2) Yeah it's overkill but it's not too bad. I would get something around 550-600W from Seasonic, Silverstone, Enermax, Corsair, OCZ etc.
My choice would be Corsair HX Series CMPSU-620HX 620W Power Supply at ZipZoomfly
. Plenty of power for future upgrades and you can't get much better then a Corsair.
3) You don't "need" a sound card but an X-Fi XtremeGamer would give you a HUGE difference between onboard sound.
4) No. Not worth it unless your budget is pretty much unlimited.
Why the 80gig IDE hard drive though?
I'm also not a fan of the case but that's just me. You can do a lot better for $120 in my opinion.