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e8400 is the sweet spot. If you run multiple apps at once you could go for a q9000 series q9450 quadcore. Its more expensive though.
If your never going to overclock very far you could get a cheaper e8200 and just give it a little overclock to e8400 levels.
really though its usually pointless to have a great processor teamed up with a crappy videocard.
You should be more focused on spending another $20-30 to get to 2gb of ddr2 800 ram and a better videocard, preferably at the very least an nvidia 8600gt which you can get for $65.
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