Thisshouldwill befinethe best new PSU you can get for under £50 - http://www.overclockers.co.uk/showproduct.php?prodid=CA-007-XF&groupid=701&catid=123&subcat=1497
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I wouldn't risk using a 'no-name' PSU. I doubt very much that it will provide anywhere near its 'rated' wattage of 500W stably. It is probably a 500W peak load PSU.
Definitely buy a new one.
What brand is it? Does it have anything written on it at all?
Although I can see the appeal due to the price being a lot lower than others, you need to remember that a badly built PSU is a ticking time bomb. If it goes, you risk looking all your components along with it.