Continuing...
450W MicroATX power supply for all your power needs. Definintly should power everything you got in that tiny box. People have given feedback with heat issues, but from reading the other descriptions of power supplies it seems like you just need good ventilation. Which you should have. 66 dollars.
AMD Athlon 64 4600+ Dual Core for 266$.Some newer games like Elder Scrolls IV: Oblivion supposed threading, plus this processor is fast enough that you won't have to buy a new one for quite a while, I think.
LITE-ON 16x DVD burner, black. 33 dollars, but not a LG item. Still looks good, though.
Up to 1147.98 or so so far... now the monitor!
Widescreeen LCD with DVI connectors for 183 dollars. Along with a 5ms response time, and 1440x900 resolution.
Okay, we're about 30 dollars over... but it would be nice to have surround sound for your games, wouldn't it?
Creative 7.1 Speakers for 86 dollars. No wall mounts, though, so might have to buy those seperatly or place them on bookshelves. Or if you want you could just headphones or your old speakers.
And for tying up all the cables in your computer...
Generic cable ties for 9.49. The case reviews recommend tying down the cables, so you'd probally want this.
Without the speakers, this system costs 1340.47, which is around your budget. With the speakers, it's 1426.47 dollars, 126.47 over your budget, but you get 7.1 surround sound.