I would really suggest to install linux.
Grab ubuntu, its really a everyman linux. A blind monkey can install it (no offense)
You´ll be surprised, the OpenGL viewport preformance will be a lot higher, and the overall performance will be better as well.
You can download it, burn to CD or setup a pendrive to boot from (all howtos on the homepage) and try it and even install it from windows for ease of access. Dualboot no problem.
And if it is nothing for you, at least you widened your horizont by trying. I was tought sceptical interest is better than diffuse rejection =)
Other than that, your E8500 uses socket 775.
You can, if your board supports it, grab a Q9400 or a Q9550 - you get them used on ebay, and there isn´t much that can be broken with a CPU other than thermical exhaustion.
I got latter one, for 3 years now, the latest stepping OC´s to ~4GHz with aircooling. Mine runs with 3.6GHz without raising the core voltage. (Reference is 2.83GHz)
I think it was a great buy. Back when I bought it it was 250 Euros and there is still no need to upgrade and I never had a processor longer than 2 years. This one will last until it fries or I get an Octcore =)
Ram can´t be replaced with anything but more. But with 4 GiB you should be fine unless you need to render postersize in 600dpi or have massive phyisical simulations.
For the graphics card. The more money the more power. Easy as pie. But your´s should suffice. The 260 is slightly faster than my GTX9800+ was, and I was able to work on 2mio+ models, shaded, the rotating and panning got slow (it seems to be single threaded and cpu dependend to translate and rotate the coordinates so i guess it was more the cpu bottlenecking not the gpu) and in wireframe no trouble at all.
I´d go with:
if (satisfaction == false) buy(Core2Quad);
RAM and GPU should be fine. And the quad should speed up your rendering quite a notch. Viewport performance might raise a bit.