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If your planning to do any emulation, pick an nvidia card over ati which has pretty poor OpenGL drivers.
As for those 2 cards the 8600gt gains zero (0) performance advantage of having 512mb of ram vs 256mb ram, since it only has a 128bit memory bus which prevents it from taking advantage of the extra 256mb they sometimes add to the card. All the reviews confirm this, and its mearly done as a marketing ploy since the ram used on the 8600 is relatively cheap yet can impress consumers into buying a product.
Definitely get the 8800GTS 320mb, but if possible see if you can get a 9600GT 512mb which is maybe $10 more than the top of your price range.
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