I've read lots of threads in here about building new systems because of the economics and the bloat of retail computers, but then I've also read advice that there's no point in spending >$500 just to play a game like AH

(less than $500 won't be a great system anyway). Fwiw, I don't do anything graphically intensive on my computer except play this game and stream movies from netflix. I'm fairly content with my system as it is now: lots of usb ports, slots for digital camera cards, etc. So here is the low down on this compaq presario bought way back at the end of 2004:
1.8ghz AMD sempron
1.5 gb ram (I added a gig last year).
80 gb hard drive (small but I only use half of it).
NVIDIA GeForce FX 5500 (pci) 256mb vram (hand me down, originally had integrated fx)
250W PSU (barely adequate, I know)
XP sp2
I've read that you can replace a mobo and cpu without reinstalling XP (this is my biggest desire); it will only ask for the registration key.
I run AH at 1024x768 res, usually with range and detail turned all the way down (I can load 1024 textures with no difference in peformance). This yields about 30-60fps offline, but in big furballs with smoke and fire fps can drop to ~20fps or a little worse. I have also turned off anti-aliasing and any other graphics card feature that degrades performance, so things look a little chunky and shimmery in the game. Still, this performance is good for the system I have, mostly because it is in good condition and never infected with spy/adware or viruses or any other kind of bloat.
I would like to run AH in 1280x1024 res with detail and range turned up a bit (if not all the way), and stay at >30fps in big furballs with smoke and fire. My cpu is my biggest limiting factor at the moment, so what kind of improvement could I expect if I....
replaced mobo and cpu
replaced psu (400W? 600W?)
is it worth it performance-wise to have a sound card?
Looking at various prices, this would come to around $300-400. If these upgrades would do the trick (they would certainly extend the life of the machine), then I would research specific products. Thank you.