Need help picking parts for a build

My boss has a rather old computer and wants to build something that can play modern day games. I haven't built a computer in several years so I am not to sure what is the best. I asked him for a ball park figure and he said $500 but he is willing to go over it.

After talking to him he will be using Windows XP Pro but will adventually upgrade to to Vista or Windows 7.

I was on newegg looking at computers parts for a bit looking at motherboard/processor combos and this one really intiruged me;
AMD Phenom II X4 920 2.8GHz Socket AM2+ 125W Quad-Core Processor Model HDX920XCGIBOX - Retail
ASUS M3N78-EM AM2+/AM2 NVIDIA GeForce 8300 HDMI Micro ATX AMD Motherboard - Retail
http://www.newegg.com/Product/ComboD...t=Combo.191005
Combo Price: $244.98

As far as other components I don't even have the slightest idea. I am not sure who makes good power supplies and processors.

The only thing he mentioned was he would like a lot of storage and possibly an sd card reader. We would be buying everything new for this pc and won't be reusing any old parts. If anyone has recently made a similar build in the price range and can recommend any parts please let me know. Thanks

Processor - Core 2 Duo Wolfedale E7400 - $120
Motherboard - MSI P45 Neo-F $90
RAM - OCZ2G10664GK $48
HDD - ST3320613AS $85
Graphics - Sapphire 3870 $85
PSU - CMPSU-650TX $95

Total - $523 + S&H
All parts were pulled from Newegg. The only thing that is missing is a case.