OS: XP Pro. Home is a POS pain in the ass. Avoid at all costs.
Vid Card: Like you said: 9800 Pro. Great card, great price, and will play most of the games for a couple more years.
HDD: SATA isnt much faster at the moment *unless* you get one of the Raptor 10,000 RPM drives. Those things are great, but expensive (around $200 for 74GB). Id get a board that supports SATA and go with normal ATA for the moment, upgrading when/if it becomes feasable.
PSU: Definitely get a good, reputable company. I recommend Antec.
But shit man, those specs you have now will get you a machine for less than 1K. Either get a hella nice machine or like two huge LCD monitors to go with that one
