Your set up is not too different than mine.
More RAM would definitely help you out, as would a new GFX card. your CPU will be a limiting factor, but it will still work.
Unless you are running a 64-bit version of Windows it can't utilize a full 4 gigs, but only 3.5 gigs. Assuming you are running in dual channel, go with two sticks of 1 gig and two sticks of 512MB to give you 3 gigs. Or just splurge for 4 gig and don't worry about the .5 it can't see.
There are all kinds of great cards that will romp that X800. The 4830 and 4850 will blow your mind and can run with your current PSU (requires 450 watts).
If you could locate a better CPU it would be great, but they are hard to find and cost way too much any more.
If you did build new, you could use your current PSU with no problems.