CPU is a bit weak (not surprising, given the age) and it'll be down to the game vs someone with a high end Core2Duo as to who wins (Core i5 means 4 cores so wide execution (many threads) for any games that can use that and they're fast cores so even only using a couple it is still a beast, and Intel added some dynamic clock sauce so when it uses two cores they run faster for the new design, which allowed them to get beyond the Core2Duo/Quad compromise of four slow cores vs two fast ones that you had to make when you purchased that computer - today's games are likely to expect at least a first gen i5 in a lot of computers for people looking for higher end settings, even if PC settings are far more about GPU than CPU requirements).
Don't let people tell you the 6850 is a terrible card, but you didn't buy an enthusiast card designed for trying to get the settings as high as they can go, you spent $120 for a GPU (possibly should have spent $140 for the 6870 model but if you only had a bit over $100 to spend on an upgrade then you didn't get taken for a ride) so you have to play with the settings to find out what detail you can add without crippling your frame-rate. You may find a few people who say the card was quite high end, these people did not realise when AMD changed their numbering system (the 5850/5870 became the 6950/6970 with that generational upgrade, the 68x0 cards are a lower tier aimed at mainstream and OEM 'gaming' systems and not people who spend hundred of hours and dollars on games and buy their hardware appropriately (if my Steam account has $4000 of games tied to it then I can probably live with spending $300 every few years to get a GPU to really get every ounce of visible detail out of those games)).
In my book (buying today) the 6870 with the higher clock speed and an extra block of cores in the GPU design (the 6850 has a block disabled compared to its brother) in the sub-$150 area of 'gaming but skint, will gets lots of use in F2P titles as games are expensive and Steam sales are the only way of getting access to occasional AAA hotness'. But you didn't get conned if you asked people to advise you for a very cheap GPU. When a bleeding edge GPU is $500 and spending $350 to $250 is where gamers (enthusiasts) should focus, spending half of the bottom end of that and still getting something playable is decent, and your CPU will possibly hold you back in some games anyway (although things like better textures and shaders can be an almost 100% GPU focussed processing requirement so some settings should not care about your CPU).
If you want to return that card as you were actually looking for advice for a really nice GPU (thinking that in maybe 12 months you'll be replacing the CPU/mobo/RAM but bringing over the GPU in a staggered upgrade cycle that makes a decent amount of sense - because at one point you'll need to get a modern CPU to continue to play any PC game rather than picking and choosing based on games with low CPU load) then the nVidia GTX570 is getting very close to $250 with rebate right now. It is about to be replaced by a new 660Ti (the 670 will be coming for $350 more than likely and should be a few notches faster but the 660Ti is the expected $250 new model from nVidia and I don't think anyone is entirely sure if it'll slot in just above or just below the 570 in performance - it will use less power but as long as that PSU is a good brand then you should actually be ok with powering the 570, although people are always going to be happier if the PSU says 650W on the side when you're using a high load power GPU) but at $260 (last week I saw it on NewEgg at that price, this week it's maybe $10 more from my quick glance) this is being sold to clear the way for the new model at a great deal price. This card wasn't a terrible idea for $350 a few months ago and is going to let you enjoy the sliders and only really play with them to get around the weakness of your four slow CPU cores (which will mainly be an issue if games are coded to use two fast cores so that'll be a per-game worry and not a universal compromise - more modern engines are going to be more likely to use DX11, which actually uses less CPU to render scenes so increasing sliders will be less likely to get bogged down in the CPU limitations, and also be coded to get the most out of all four cores).
Edit: less spelling mistakes
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