If the frame's geometry and size are wrong, your new bars and seat won't do you any ergonomic good, and riding a bike that's too big for you doesn't look cool, even if it's your favourite colour.
A new wheelset should be interchangable with another frame, as long as the axle length is the same. Is it 130, 135, 120mm? Will your chainline be right? If you get new handlebars, choose a diameter that will be compatible with current standard stems - which might mean replacing the stem on the "Approved". More $.
For respectable parts you're looking at at least double your budget. Ride it as it is, do some research and save up for a real bike. Sorry.
Also, come over to the Classic and Vintage forum, there's a big difference between 'vintage' and 'just old'.
I think you're gonna need a bigger bike shop.
Last edited by mike alanko; 05-20-07 at 02:42 PM.