and my final dilemma is what to do with the old pc? Sell the whole system on ebay or auction off the hardware piece by piece?
you will probable get more money if you keep it together. a majority of people do not know how to peace together their own system and will pay more for a pre built one. we can see this from the amount of people that buy dell, compaq, e machines, etc.
you may wish to purchase a new OEM version of windows for the machine though, if you intend to keep the OS thats already on it. you do not want to sell a PC that uses your liscense key.