Wow, yeah, get a new lid! Newer standards (the federal CPSC standard was created in 1998) have come out since then. Helmet manufacturers claim that helmets degrade over time too.
As an owner of a large noggin, I have the same preference as you for a close fitting helmet, but comfort is also important. I used to budget only $40 for a helmet I drifted up into the $100 range but after realizing it's way easier to buy a fashionable helmet if you spend more, getting further along in my career, and also just being willing to splash out more on safety gear since I figure it's a good investment. I would pay more than that on a hospital visit.