So here is my final configuration(yup I know it will be bottlenecked due to processor and motherboard but hopefully I'll able to play most of the games at 2560x1440 resolution with decent frame rate)
Intel core 2 duo 3ghz(already have)
7g ddr2 ram 800mhz (already have 3 will be buying 4g more)
asus p5k vm motherboard(already have)
MSI R6950 Twin Frozr III Power Edition/OC 2gb(will be buying)
Corsoir VX 550(will be buying is it enough?)
Dell u2711(will be buying)
Seagate FreeAgent GoFlex 3.5 Inch 2 TB External Hard Disk (Black) or Seagate ST2000VX002 Internal Hard Drive
not sure which to buy as i'll using it most probably as internal how is the data transfer rate on external one (will be buying)
Any alternate recommendations(with hopefully dell u2711 and same motherboard ram and processor)