Do you live near a Microcenter? If so, you'll be able to get a discounted CPU and motherboard.
You'll be able to use your speaker with the motherboard sound card, unless they require advanced ports.
Most Windows XP games will run on Windows 8.1 Update 1, if they don't, you can run them in Windows XP compatibility mode. (right click on core game exe, click properties, click the compatibility tab, and under compatibility mode, check 'Run this program in compatibility mode for', and in the dropdown, select Windows XP (Service Pack 3))
You pretty much need a front fan for the drives and a top, back, or bottom fan for the components on the motherboard. Make sure your card has a fan. You don't need to worry about the power supply, as long as the fan is not blocked. If your case comes with a bottom power supply fan mesh, direct your power supply fan to that, since your computer could do without the extra heat.
Anyway, here's the build:
PCPartPicker part list / Price breakdown by merchant
CPU: Intel Core i7-4790K 4.0GHz Quad-Core Processor ($339.99 @ Newegg)
CPU Cooler: Cooler Master Hyper 212 Plus 76.8 CFM Sleeve Bearing CPU Cooler ($29.99 @ Newegg)
Motherboard: Asus Z97-A ATX LGA1150 Motherboard ($143.49 @ Newegg)
Memory: G.Skill Ripjaws X Series 8GB (2 x 4GB) DDR3-1866 Memory ($88.99 @ Newegg)
Storage: Samsung 850 Pro Series 256GB 2.5" Solid State Drive ($199.99 @ Amazon)
Storage: Seagate Barracuda 1TB 3.5" 7200RPM Internal Hard Drive ($49.99 @ Amazon)
Video Card: Gigabyte GeForce GTX 770 2GB WINDFORCE Video Card ($309.99 @ Newegg)
Case: Corsair 750D ATX Full Tower Case ($119.99 @ Newegg)
Power Supply: FSP Group AURUM 92+ 450W 80+ Platinum Certified Semi-Modular ATX Power Supply ($111.50 @ Newegg)
Prices include shipping, taxes, and discounts when available
Sorry that the price is a bit above the $1,200 budget. But I can justify it:
The 4790K is probably the best CPU on the market that is reasonably priced. It has great overclocking potential, and beats all AMD CPUs available today.
The memory is 1866, so it is slightly faster than 1600 and is better fit for gaming. It has a CAS of 9, so there is less delay.
The 850 Pro is faster than the 840 Evo, but if you want to save a bit of money, you can sacrifice a bit of performance by replacing the 850 Pro with the 840 Evo.
The video card I got is slightly faster than the 280X.