[KarmaKiller]

First I want to say sorry, I totally missed that last paragraph of yours.

With a $500 budget, you could get a C2Q,C2D, but you'd sure be pushing it.

Newegg.com - Intel Core 2 Duo E8500 Wolfdale 3.16GHz 6MB L2 Cache LGA 775 65W Dual-Core Processor - Processors - Desktops
$190

Newegg.com - GIGABYTE GA-EP45-UD3P LGA 775 Intel P45 ATX Intel Motherboard - Intel Motherboards
$135 ($115 after MIR)

Newegg.com - OCZ Blade Series 4GB (2 x 2GB) 240-Pin DDR2 SDRAM DDR2 1066 (PC2 8500) Desktop Memory Model OCZ2B10664GK - Desktop Memory
$65 ($55 after MIR)

Newegg.com - BFG Tech BFGEGTS2501024E GeForce GTS 250 1GB 256-bit GDDR3 PCI Express 2.0 x16 HDCP Ready SLI Supported Video Card - Desktop Graphics / Video Cards
$140 (free call of duty:World at War game)

Newegg.com - COOLER MASTER Centurion 5 CAC-T05-UW Black Aluminum Bezel , SECC Chassis ATX Mid Tower Computer Case - Computer Cases
$50 (free shipping)

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^^That's $580 not including rebates and shipping.^^
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If you want cheaper

Newegg.com - Intel Core 2 Duo E8400 Wolfdale 3.0GHz 6MB L2 Cache LGA 775 65W Dual-Core Processor - Processors - Desktops
$168

Newegg.com - GIGABYTE GA-EP43-UD3L LGA 775 Intel P43 ATX Intel Motherboard - Intel Motherboards
$80

Newegg.com - Patriot Extreme Performance Gaming Series 4GB (2 x 2GB) 240-Pin DDR2 SDRAM DDR2 800 (PC2 6400) Desktop Memory Model PGS24G6400ELK - Desktop Memory
$44

Newegg.com - XFX HD-485X-ZDFC Radeon HD 4850 1GB 256-bit GDDR3 PCI Express 2.0 x16 HDCP Ready CrossFire Supported Video Card - Desktop Graphics / Video Cards
$120
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^^That's $462 no shipping or rebates^^
This system won't fold as well, because ATI cards aren't the best for folding. But it's still a very capable rig.

And still yet, the AMD combo aaron put up is a great bang for buck combo too, so that's still something else to consider.

@JJ
I think an I7 rig would really be out of his budget, after GPU is factored in.