Please help me on my first build.

[zrike]

I just got this bare bones kit:
http://www.tigerdirect.com/applications/searchtools/item-details.asp?EdpNo=4319088&csid=_22

For the DVD drive, I'm going to use:
http://www.newegg.com/Product/Product.aspx?Item=N82E16827151175

And instead of the hard drive from the bare bones kit, I'm going to use:
http://www.newegg.com/Product/Product.aspx?Item=N82E16822136236

Also, I have a 600w PSU on my current computer that I'm going to swap with the one from the kit.
As a side note, my monitor is a 17" VGA.
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Thats that for the specs of my build. Now for the part I need help on. I want to be able to play the newer games at at least mid-quality(preferably more obviously), so I'm trying to figure out what video card to get.

I can afford maybe $120 or so max. And since the case is a ATX Mid-Tower, and the board a microATX, it cant be too large size wise (I think? this is my first build, so I don't know how the size of the card really translates.).

Two final questions.
1-Does the type of cpu fan I get matter too much? Because I need to get one before I start putting this together, so I'm gonna get it at the same time as the video card.
2-Considering the specs, and the fact that I want to play Games, is Vista or XP better?