Looking for a new video card

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Again, +1 to what Technochicken said. Can't beat those cards for the price right now. Although the HD 4870 has DirectX 10.1 support and the GTX 260 is only DirectX 10, if you plan on playing any 10.1 games which there aren't many of right now. I see you're using XP, so that isn't relevant unless you use the DirectX 10 to XP hack which I don't recommend.
 
I recommend this card and this CPU.

Both should be within your budget and give you a massive performance boost. The CPU alone will give you at least 10-15% more performance compared to your old one.
 
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