A little help...?

Hi, I'm new to this site, and new to working on my computer and am looking for some (probably basic) info on hardware, mainly dealing with what I have and what I can do with my computer. I bought it from a small town shop in the area about two years ago, and here's what I can tell you about it: AMD Sempron 2800 processor, running at 1.60 Ghz, 960 MB ram, an 80 G hard drive and now a 500 G as well, Dvd player/writer, 350 watt power supply. I think the motherboard is an Asrock KB Upgrade VM 800 (that's what it says on it anyways... told you I'm new to this) Used mainly for music playing/capture/editing, internet work etc. I originally wanted a bigger hard drive, as my 80 g was full long ago with music sets. The shop told me I'd have to replace my entire computer, saying the motherboard wasn't compatible with the Sata requirements a bigger, newer drive would require. Once home, I opened the case out of curiousity, and saw a plug on the motherboard that said Sata beside it, so on a hunch, bought a drive and installed it and to my surprise, it worked. So, when the shop also tells me I can't upgrade to a faster processor and more Ram as well, are they just trying to sell me a new computer? Can I swap in a faster processor, and if so, what would my limit be? Am I right in assuming you simply remove the chip and replace with the new one? As for increasing Ram, it looks like there are only two slots for it, can I get a larger amount of ram and replace what I have? Or since there are only two slots, is 960 my limit? What I'd eventually like to do is get a Blu-ray dvd player for it, and link it to my flat-screen, any reason this isn't possible?
Any help you can provide would be very appreciated, I've modified cars and trucks for more performance (was a mechanic for ten years), but computers are new to me (but nicer in my opinion, no grease under my fingernails, lol).
Thanks.

 

Here's link to a supported CPU list for your motherboard: http://www.asrock.com/mb/cpu.asp?Model=K8Upgrade-VM800&s= I found it a bit confusing, as it seems the upgrade means that there's a socket board that changes the 754 socket to a 939 and/or AM2, so you'd have to know which socket you actually have to know which CPU you can take. I'm assuming you're using on board video, due to the amount of RAM you posted; 1gb - 64mb video memory = 960mb. To be honest, your RAM is probably OK but a 2nd gig wouldn't hurt. A CPU upgrade is a REAL good, as is a video upgrade. You do have an AGP slot, so good video cards are available.
Welcome to MajorGeeks :major
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BTW- the "KB" in your motherboard model number is really a "K8"... it's an eight, not a B