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PC Upgrade suggestions!

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That machine won't run super slick, but neither should it be painfully slow. Do you have all drivers installed?

To my mind suggesting you need an i5 and 8GB RAM to run Windows 7 + Office is insanely over the top (and whether you are using 64-bit makes absolutely no difference to the hardware requirements). As per your motherboard can take a Core2Duo up to E6700. That's a significant upgrade over a Pentium D (which I agree is too slow to run Windows 7 well). An E6700 will cost about $50 from Ebay. You won't need a power supply upgrade or more RAM (in my opinion). You may need to perform a BIOS upgrade though to support this processor. Allow about two hours of your time to buy the CPU, do the BIOS upgrade and install it when you're deciding which way to go.

An equivalent new machine would be something like an HP 6300 Pro. A 6300 i5 with 4GB RAM will cost around $600+. You'll also need to allow an hour or so of your time to set up a new PC when you're deciding which way to go. I'm not in a position to say which is a better choice for you. As a rule though I generally tell people to buy new if they can afford it. You'll get better lifetime out of the upgrade, you get a fresh warranty, you get a legitimate copy of Windows and you get a machine that Just Works. In a work environment especially these things are important, as your time is not free.