Resuscitating a slightly older system (long)

I've had problems with my Q6600 build almost from day one, but they've gotten steadily worse, resulting in not using it for about the past year or so. USB ports were either unstable or unusable, starting with one and going to almost all of them, and it had been trial and error just to get it to boot toward the end. I've halfassed-troubleshot it once or twice, but since I have laptops to browse with and little spare time, it hasn't been a high priority for a while. The specs are:

• CPU: Q6600

• HDD: OCX Vertex LE or WD Raptor 36GB, neither of which is installed currently

• RAM: 4x1GB Crucial Ballistix

• GPU: EVGA 8800GTS 320MB

• Motherboard: Abit IP35 Pro

• Power Supply: OCZ 700w

Pulled it out today to see if I could repair it, possibly replace a part or two instead of doing a whole new build. It will not boot, and when I turned the power supply on, the red LED on the motherboard flickered rapidly, and the digital readout went back and forth between 00 and 1 before fading out to nothing. I swapped the power supply out with another older unit that did not have the proper connections for CPU12v or PCI-e, but the LED came on strong and it "started up" (albeit with the GPU screaming for that aux power).

So I take it the power supply is the failure point. Newegg reviews for the PSU support its lack of longevity, and I'll probably confirm this later today with a multimeter, if I can remember what needs to be jumped out to start it up. My question is, does it make sense for the USB ports to fail due to a power supply issue that would still boot (for a long time, anyway)? Does that mean that the motherboard has permanent damage, and if so, is it worth buying another power supply? I don't really do a whole lot of top-end gaming, more like midrange, so to be able to buy a power supply and whatever GPU would make the Q6600 limiting would be preferable to a whole new build. And having a strong secondary system instead of the AthlonXP 2500+ that I'm currently using would be nice if I decide to make a new build anyway.

Thanks for reading, guys, and in advance for any input.