What power supply did you buy?
You may run into overheating issues with that case, I've just seen it's a small media centre style one with not much airflow.
A new CPU would help but to do that you would need a new motherboard, and more than likely new RAM, your PC seems to use DDR2 rather than the more modern DDR3, and new boards use DDR3.
As for what settings you could run, it depends on the game and your monitor resolution. For demanding games, low/medium, for less demanding games, medium/high - at a guess.