That Acer PC you linked to is unlikely to take any worthwhile graphics card upgrades on account of its form factor/size.
Get something like this click here for £220 & an OS for £60 - WinXP/Vista click here.
Looks like you have a budget of ~£500, so with the rest of the money (£220), get the following upgrades:
- Graphics card, e.g. a £76 HD4850 click here
- PSU, e.g. a £38 Corsair 400W CX click here (required for the graphics card upgrade)
- Monitor, e.g. a £86 19" TFT click here
- Keyboard/mouse/speakers? for £20
Another alternative to the above upgrades is a £54 HD4670 (click here) which will not require a better PSU, thus saving £60 overall. You could save this money, or use it for a larger monitor (click here) for example. G