The 5670 is a much better card than the GT 240.
Its a good fit for a HTPC because of its low power draw. I mean its not a monster or anything and its performance/price isn't outstanding but for what you're looking to achieve its probably a good fit.
The X4 635 is a fine CPU for the price, I think it'll comfortably achieve what you set out to do. There's a combo available with a 600w modular OCZ PSU. Modular PSUs make all kinds of sense for a HTPC and it'll actually work out cheaper than getting the current PSU you have specced. Its a pretty efficient unit as well, so go for it.
Edit: Here it is, means the PSU only costs you $30 after rebate and you don't have lots of extra cables flooding your case either:
http://www.newegg.com/Product/ComboDealDetails.aspx?ItemList=Combo.468992
Does that case have space for a dual height GPU? The 5770's idle power consumption (which is what really matters) is actually super low and not that much different from the cards you currently have specced. It'll only use more power when it needs it (i.e. when you'r playing games) and it'll provide as much as a 2x boost in performance, its worth considering imo:
http://www.newegg.com/Product/Product.aspx?Item=N82E16814102873&cm_re=5770-_-14-102-873-_-Product
Only $135 after rebate and its super short which is very handy for a HTPC.