Bear in mind OP isn't talking about playing AAA titles here.
He has monitors but I don't know what connections. That shouldn't be an issue, goodwill has tons of cheap monitors.
He probably is going to want to use Windows since that is what he has always used, but I can probably persuade him to use Linux.
No, he doesn't have to spend $150. He doesn't have to spend anything at all, he can just keep playing on his laptop. But he wants a desktop gaming PC.
EDIT: Turns out he already has a copy of Windows 7, so that's what he'll be using.
I am trying to convince him to return it and I think he will.
This is what I would do.
Link to CPU: http://www.amazon.com/AMD-Phenom-3-4Ghz-512KB-4000MHZ/dp/B002SRQ214
6 core variant: http://www.amazon.com/AMD-Phenom-Six-Core-Processor-3-2GHz/dp/B005DM7LFC/ref=sr_1_2?s=electronics&ie=UTF8&qid=1460346737&sr=1-2&keywords=AMD+Phenom+1090T
With a 4 core you're looking at 574 USD. People will say that phenoms are shit but mine is still kicking ass and taking names. I'm playing skyrim at ultra. 0 issues. Someone might know of a better Mobo though.
Also, yes, a 370 is fine with a phenom. A 380 or 390 would work fine too with enough power from the PSU. But a nvidia card would be best recc a 960 as they don't play nice if its not PCIe 3.
Not exactly $400 but I'll see what he can do.