Hello.
I'm writing this having gone thru a similar experience as yours. Since building my current rig (see below), I've built 2 C2D rigs and 1 AM2 rig for family and friends that have used parts from there "old" systems.
You can definately stay under a $1000 for this rig. As far as the decision between AMD AM2 or Intel Core 2 Duo, it really boils down to price. AMD is introducing price cuts to make their CPU's more attractive. But, if you're going on pure performance, Core 2 Duo simply is better in most every aspect and will really shine in media content creation and encoding. Since this will be one of your primary uses, let's look at a C2D rig:
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Intel Core 2 Duo E6600 Processor - Retail $315
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Asus P5B-E P965 Express Motherboard $158
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Mushkin DDR2-800 SDRAM Dual Channel Kit, 2 Gigs $250 after rebate
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HIS Radeon X1650Pro Video Card CroddFire Ready 512mb $140
So, for a total price of $863.00, you're getting apretty decent rig. You really haven't skimped on anything here. For the CPU, went with the mid-level C2D E6600. It's a very fast chip out of the box that can easily be OC'ed to 3.0 GHz! But what really sets it apart value-wise is that big 4mb of L2 Cache...ideal for working with media applications. Plain and simple, this chip kicks serious butt for the price you're paying!
For the motherboard, the Asus P5-series have gotten rave reviews for their stability, features and adjustability. This one is based on Intel's newer P965-series chipset, so it is very stable. But, because the Asus BIOS is so flexible and powerful, many users have achieved some pretty decent OC's quite easily. Aside from this, it has 7(!) 3.0 SATA ports with support for RAID, 8-channel audio, firewire, 6 USB 2 ports, back panel ports, headers, comes with a ton of cables, etc. Another fully-loaded Asus product.
For memory, went with one of the more respected brands in Mushkin. Since all DDR2 memory is expensive these days, it makes no sense to go with one of the "lesser-known" brands to save some bucks and chance incompatibility and/or stability problems. With this Mushkin kit, you're getting matched pairs for Dual Channel operation at a full speed DDR2-800 rating. Plenty fast with some headroom left over.
Last, went with ATI's newest mid-range release GPU, the Radeon X1650 Pro. It's got some decent features and performance specs but what this particular HIS Tech model also offers is double the memory at 512mb. It's not the fastest mid-level card available for gaming, but it will offer the image quality that the ATI cards have become known for. Also, it won't require you to upgrade your existing PSU as it doesn't demand too much power nor need it's own power connection.
So, that's it. Stayed under $1000 and you have a really good, decently fast system that will work for all current applications with really speedy performance. I'd definately use that Zalman cooler you have. The C2D CPU's are
extremely efficient already, but that Zalman will make temps and noise levels even lower.
Hope to have helped...
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