While it is fun to build, mod and restore and practical, and I can appreciate that. I'd take the budget and get a new chassi looking at those pictures.
The reason being just how much better chassis have become compared to the oldschool ones.
Better airflow, more silent designs, easy to remove and maintain dust covers, route cables behind the motherboard tray etc etc.
With your budget there's plenty of good options available! and you wouldn't have to mount your cpu cooler the wrong way anymore
Then get a Corsair HX 650 psu later. They are very robust, modular and will last you a long time, even if you decide to add more hardware later on or overclock.