New PC of good spec = around £400-600. Some pre-built systems often come in at around £300 but use entry level components.
That graphics card is pretty decent. While AGP is old tech, the top-end AGP cards are really rather meaty. Would be a shame to ditch it, but since the industry is using PCI-e as the standard, you dont have much of a choice if you want your PC to remain upgradable with new bits.
The motherboard you got listed there is from a budget manufacturer. It uses a pretty poor chipset (VIA's lower spec chipset range really does suck), however, it looks like it was DESIGNED to be a stop-gap board for people making the jump to the newer technology, meaning you can use your old RAM & Graphics board, and stick new stuff in when you can afford. If you cant spare the money at the time of buying, get that and upgrade at a later date.
As for CPU's, the E6600 looks the best bang for buck. The Core2's beat AMD on the majority of benchmarks, but AMD still hold their own when it comes to gaming, so you may want to consider an Athlon X2 (the X2 5600 is a good buy). Then again, if you do go AMD, you'll need a different board.