Well I know you want to go low profile and cheap. Of course it'll be better the more you speed on it. RAM: Your motherboard supports dual channel RAM, this doubles your RAM speed for free.
Instead of buying 1 stick of 2GB RAM, buy 2 sticks of 1GB RAM. Graphics Card: If you're not planning on playing 3D games, which you're already too limited to do with the other low profile budget hardware, you'll probably be just fine with the built-in video card. Don't get me wrong, the built in video card will be insanely slower.
But if you're just watching TV and videos, you should be fine. If you get delays during playback (half the screen is moving, the other half is just stuck, or general choppiness), then you'll need a real card. Also if you get a real video card, get one with a fan.
I doubt you'll have any fans except the one on the power supply. Passive heatsinks don't do well at all, even on weaker video cards, when there's little air-flow. Sound Card: This too can be skipped and you can use the one built on the motherboard.
External sound cards (not really external, just not built on the motherboard) will improve overall computer speeds when it's playing any noise, and will usually have much better software for customizing settings. It's probably worth it to buy a real sound card. Creative Lab Sound Blasters have always had the best processors to free up your CPU when sound is being played.
I'd recommend getting whichever sound blaster is in your price range. Which cards/brands sound better is subjective. PSU: It's very iffy if it could handle the system without an external video card.
Biggest thing is that you should spend $30-$50 on a power supply, not $30-$50 on a case with a free PSU. A free PSU is worth $0 and you'll get what you paid for. Not only won't the free PSU last as long, it'll likely damage everything plugged into it when it blows.
You'd be much better off with buying another real PSU. 400 watts would be good, it's more than enough, but that means it'll never be really stressed and will last a long time.
I'm a bit skeptical on the compatibility between the motherboard and the processor, and here's why: Intel® Socket 775 Core™2 Quad/Core™2 Extreme/Core™2 Duo/Celeron® E1000 Series and 400 Series CPU Support Intel® 45nm Multi-Core CPU - Support Enhanced Intel SpeedStep Technology (EIST) Versus your processor - E3200. Also, your graphics card resolution may not be as good if you were to connect it via DVI. You might want to look for something that has an HDMI port.
Just my suggestion. Everything else seems legit. Good luck, and good choice.
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