Here's a sampling of what you COULD get...
AMD Phenom II X4 965 Black Edition Deneb 3.4GHz 4 x 512KB L2 Cache 6MB L3 Cache Socket AM3 125W Quad-Core Processor
ASRock 870 EXTREME3 AM3 AMD 870 SATA 6Gb/s USB 3.0 ATX
8x/8x PCI-E SLI/Crossfire mode, max 16GB RAM dual channel DDR3 1800(OC)
EVGA GeForce GTX 560 Ti FPB (Fermi) 1GB 256-bit GDDR5
30+A PSU recommended, factory overclock close to a GeForce GTX 480 which costs 300+ USD
235 USD (and a 25 USD mail-in rebate, for 210 USD)
16GB (4 x 4GB) DDR3 G.SKILL Ripjaws X Series @1333, 7-7-7-21 timing, 1.5V "eco mode"
300GB 10000 RPM Western Digital VelociRaptor 16MB Cache, SATA-II
140 USD (for OS/games/apps)
2TB Western Digital Caviar Green 64MB Cache, SATA-II
80 USD (for storage)
OCZ ZX Series 850W Fully-Modular
single 70 Ampere rail, 4 x 6+2-Pin connectors
= 865 USD
You can "recycle" your old PC case and optical drive, those are not THAT important. At least not for now.
If it's too expensive, you can "dial back" the memory from 16 to 8 gigabytes - not like you'd need even 8, but, hey, why not.
Alternatively, you can look at ATI video cards, but they won't be much cheaper for similar performance. Although, you do get a wider selection to pick from, so you could pick something cheaper with more memory, but that would only be useful in case you want to play on three or more full high definition monitors at once. If you only have one full high definition monitor, or maybe even two, the 1 GB on the NVIDIA card should be sufficient even at high anti-aliasing modes.
That power source sure does look like overkill, but it should easily handle a second identical video card, in fact, it should handle two stronger video cards, if need be, and should stay with you for a very, very long time.
The "OS" drive also looks like overkill, and costs a lot of cash... but a SSD costs even more, and that's the best rotating platter drive money can buy right now. 300 GB should be more than sufficient for OS + all applications + plenty of games, and some place to spare too.
The second drive, you know, why not. It's dirt cheap space. No point cluttering your fast drive with music and movies and other similar things.
The motherboard is not exactly the greatest, but quite frankly, you don't need more than that.
The processor should be sufficient to not become a bottleneck even if you add a second identical video card in there.
Yes, it is a bit over your listed budget while leaving some things out (the case and the optical drive), but for some components, you just don't want to sacrifice.