On a $500 dollar budget i would just stick with what you have. No need to build a whole new computer unless you can sell the one you have to a buddy or something. I would just upgrade your graphics card with the money that you have, maybe buy an SSD to cut down on loading time. You're CPU seems fine at 3.2 Ghz.
Also you should post this problem in the computer discussion forum and try to get Dolarz advice or that guy with the Dog picture. Those two have been on that forum forever.
Here's a website that i like to use to see what highend gear there is out there.
http://www.videocardbenchmark.net/high%5Fend%5Fgpus.htmlEdit: you could also use Vertical Sync, which makes it stay at a constant 60 fps.
This post was edited by sephiroth_117 on Jan 11 2013 02:23pm