the integrated radeon is gonna fk u up. the other stuff is ok...do you have 1 or 2gb ram? from what u wrote their it seems u have 1gb, with capability for 2. but umm yeah..do you have pci express support on that motherboard? otherwise u may as well get a new motherboard + new ram (unless ur ram at the moment is DDR2) + new video card. id say about $400. a 8800gt is 150 at the moment on newegg, this asus p5k-se is $85, and 2gb of OCZ ram is $50. so your looking at a little under $300. this motherboard will support any future CPU upgrade (eg to core2duo or core2quad), and has 1 PCI-e x16 slot. you might also need a new power supply depending on what u got now...this one is good and will support if u get a new CPU too. i think that power supply will be able to handle what you got at the moment, please anyone correct me if im wrong
edit:
you COULD get vista, and dual-boot XP + vista... im not a big fan of vista lolz, but it will give you DX10 support