Personally I wouldn't advocate upgrading the processor from the i7-2600K. It's still a pretty decent CPU and the Xeon E3-1275 V2 or i7-3770K (which it will also take) only have fairly marginal speed improvements (10% or so). Benchmark comparison. It's up to you if you think the expense is worth it.
Intel boards typically don't have much in the way of overclocking features, but the i7-2600K is usually very overclockable with decent cooling and a suitable motherboard.
If this is to improve the system for gaming, a GPU upgrade would yield much more for your money than the CPU upgrade. Depending on how much memory you have, a memory upgrade is relatively cheap and may be worth doing. A GTX970 is the price/performance king at the moment, and will certainly give a noticeable improvement over a GTX550 in 3D games (it's something like 300% faster). It's over your budget, but if you're not buying a CPU...
If you still want a $150-250 range one, the GTX960 is probably the best choice at the moment. EDIT the R9-290 diggi mentions above is certainly good at that price, and a definite step above the GTX960. Definitely sort out your power supply first though before you do anything. What sounds like loose wiring could easily cause damage. Do not be tempted to buy very cheap power supplies. Antec, EVGA, Corsair, XFX, Seasonic products are mostly decent.
Edited by jonuk76, 16 August 2015 - 11:40 AM.