okay, well judging by the processor, I'm assuming it's AGP.
Here's one scenario
CPU: AMD Athlon 64 X2 3800+ Manchester - $322
Motherboard: GIGABYTE GA-K8U-939 - $58
Hard Drive: Seagate Barracuda 250GB - $104.50
I always use the onboard audio, so I didn't include a soundcard. You don't really need one. I've determined that the 250gb is the best value with the lowest cost per gb. So, unless you have bigger storage needs, that's the one I would go with.
There's still plenty left over, so you could upgrade the processor to this one instead(same other parts):
AMD Athlon 64 X2 4200+ Manchester - $400
that's a total of $562.50 for the upgrade with the second processor, and still plenty left over for a nice new power supply.
There was a thread with long discussion about choosing a power supply recently. It's on the uber budget PC thread, I believe.