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Although I already had an intel mobo and cpu, when searching on my own, AMD is the way to go on a budget. You can get the phenom x4 965 for under 200 bucks. The amd socket 3 mobos are under 200 easily as well. I would think you can get both for around $300.
 

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I frequent another forum often, and below are recent 3 builds in your price range that would be decent gaming builds, assuming "decent" means being able to play newer games at medium-high settings, but may have issues with games in 2-3 years' time (at least without upgrading to a newer video card). Note that some of the parts may no longer be available at the stated prices due to expired sales.

i5-750 / MSI P55-GD55 / Radeon 4770 / 4GB DDR3 RAM / 1TB HD / 550W PS / Antec 300 case
AMD Athlon 635 / ASUS M4A77TD / Radeon 4770 / 5GB DDR3 RAM / 500GB HD / 550W PS / Antec 300 case
i5-750 / Gigabyte P55A-UD3P / Powercolor Radeon 4850 / 4GB DDR3 RAM / 640GB HD / 650W PS / Azza Helios 910

Hope this at least gives you an idea of what is possible out there within your budget!
 

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i'd take Szayat's build, or try this



for $5 more you can get the newer version of the caviar black. same size, but looks faster.



you could also try that
 
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