I was in a similar situation about a year ago, mainly used my machine for web work and then got hooked on KOTOR...and realized what a video game junkie I could be. I spread out my upgrades since I was on a budget as well.
Once you start with one upgrade, you're going to find that you'll need other upgrades. With your "current" specs, you'll also need to upgrade your power supply. Any 6xxx series vga needs a solid 350watts, you should be looking around 400 watts. You do NOT need dual +12v rails. Should be able to find a decent one for around 50 bucks or less. Just make sure you get 25+ amps on the +12v rail.
Looking at your motherboard specs, for it's time that thing was badass. I'm thinking you might actually get a stable overclock with a new power supply and your same processor, that chip should get up to 2.6 no problem with an aftermarket heatsink. Make sure you use a multiplier in your BIOS settings so the ram stays at 266mhz until you replace the old ram.
Driver support for Win98 is pretty much non-existent these days, so WinXP should definitely be on your list.
WinXP has a little thing built into it where it takes a snapshot of your hardware. When you change too many pieces of hardware it actually won't load, and you have to call in to their customer service line to get a new vaildation code. Just make sure you're not switching too many things out after you've loaded XP...processor has the most "points" attributed to it, so if you switch out say, processor, hard drive and ram at the same time you'll probably have to call.
That being said, at some point you'll want to upgrade your processor anyway. Just be ready for that to happen. When you do get around to upgrading your processor, upgrade the motherboard as well. That way you won't be stuck with socket 478 choices. Even if you stick with 478 you should still upgrade the mobo if only to get AGP8x, SATA capability, and 800mhz FSB.
Should also put serious consideration into new heatsinks and fans. For about 60 bucks you can get a Zalman 7000b-AlCu or XP-90 for the processor and 700-AlCu for the VGA. Quieter and more efficient than stock and will get you a better OC.
Anyway, I'd suggest you split your current upgrade into 2 parts so you don't have to dump all the money at once. You can also put parts from upgrade #2 on your Christmachanukwaanzica list.
Upgrade #1
- New power supply
- 512mb ram pc3200
- 6800nu
(Approx. $250)
Upgrade #2
- Trade out your old ram for another 512mb ram pc3200
- New processor heatsink
- New VGA heatsink
- WinXP
(Approx. $200)
Later on down the line get the processor and mobo, and all of the new pieces you've bought will transfer directly over!
-z