Well, if you are smelling a burning plastic from inside there, that is DEF. not good. Personally, I would take out the PSU, open it up, and see if anything is lodged in there... possibly a wire's insulation is being burned by a hot component. JUST BE CAREFUL, and make **** SURE that you have the PSU unplugged before you do anything... Don't mess with power, just be real careful if you open it up.
If you have the funds, I would just go pick up a new PSU.... I recommend the Antec TruePower series. My old PC uses a TruePower 430, NEVER had a problem with it... Got it on Jan 3rd, 2003...