I would suggest getting the 2600XT and maybe another 512MB of memory as you said it was going to be for some of the kid's games.
The PC Power & Cooling is a very good power supply, it's just overkill for that system. You really don't need any more than 400W. This one will should work well: Rosewill RD400-2-DB 400W
Here's a higher quality unit: FSP Group SAGA+ 400R 400W
. FSP has been in the game for many years and make a quality PSU. They are also an OEM manufacture for many brand names such as OCZ and Mushkin.