Logarithm

Wow, that's pretty crap. What good alternatives are there?

USB 3 won't slow down the hdd at all. The interface is faster than the hdd.
 
 

Use a server mobo instead and have 32 2tb SSD's in RAID 0. No biggie.

This is absolutely the case. Even the original USB 3 wouldn't bottleneck an external harddrive, and those are half as fast as the ones that come on that AIO you're talking about.

thats why we have backups.

Large amounts of SSD storage is going to be very expensive.  Most games won't benefit from the increased speed much if at all.  Games like Skyrim or Fallout 4 with lots of load screens and large open worlds will see the most improvement from being run on a SSD.  Most games it doesn't really matter if you play them on a HDD or SSD.  
 
Your best option IMO is get either a 500 or maybe 1TB SSD at most if you really want to and can afford it.  Use that for your favorite games and in particular games like Skyrim that will benefit from it.  Then if you really want to have all or at least most of your Steam library installed all at once get a 2TB or 4TB Western Digital Black HDD (again if it's within your budget) and put them on it.  
 
 
That way you have some SSD storage but you don't break the bank trying to get tons of SSD space that really doesn't make as much difference as you might hope.  
 
Sorry if I seem too critical of your idea but I'm just trying to help and save you money.  

No. Two completely different sockets. There's no Kaby Lake CPU that will fit on that motherboard.

You know what? You're right, this would probably work. 

I think that you're missing that he only has about 300 USD to spend. Also, that he's in australia, where electronics are far more expensive. I'm recommending that he spends less on the DAC or amp because at the middle range pricing, investing more in the headphones gets far more value for the money. If he gets a higher-end DAC and Amp such as the schiit stack or the o2+odac combo, he really probably would barely have enough to afford HD598s, if that. I understand the idea of "invest now for a slightly cheaper time later" but it really doesn't translate to this situation and budget.
 
Also, the E10k is a pretty good DAC/Amp for only being 80 USD. Hell, I used it for my TH-X00s for a while and it did a pretty good job.
 
If he spends like 200 USD (which is what the schiit stack, the cheaper of the two you suggested, costs in US, not what it costs in AUS) on the DAC & Amp, he has nothing left for headphones.

Schiit Fulla 2 is half the price and perfectly appropriate.

Because they have machines with 48 cores of xeons but use shit computers for hosting, and its LMG, wouldn't be LMG if it worked right

Yes.

This is fine.

You can't. They are laptops. If you want better laptop cpu/gpu performance, you're going to have to get a new laptop.
 
There are some situations where this isn't the case, but yours is not one of them.

Than let experts set your system up.
With proper encryption, DMZs and the required firewalls and firewall rules.

and

1. Swap the AMD Dinosaur with an i5 6500,6600,6600K
2.If you use a TV for a monitor be prepared to put up with input lag and low response times... 

Get an ssd and a z170 board. Maybe some more memory. Other than that, it looks fine. Make sure you are counting the cost of peripherals and a windows license, too.

In order:
1. Get an actual SSD
2. Get a better motherboard
3. Get a nicer GPU
These are the things that I would recommend you do to improve this system.

1070 isn't intended for 1080p gaming.  You're taking a notoriusly CPU bound title and running it at the resolution most likely to become CPU bound on a GPU that is intended for 1440p / starter 4k / VR content.  Yes it's going to be CPU in the instance presented and likely quite noticeably; however, it's still very playable frame rates.

1) there are no sata express SSDs in existence
2) PCIe and M.2 SSDs can also be non-NVME
3) NVME on a HDD would be useless because HDDs are not bottlenecked by SATA
4) sata express and PCIe are types of connectors
5) https://en.wikipedia.org/wiki/NVM_Express

BTW, no you don't need an AMD cpu. You'll be able to get a decent rig without having to get one, and frankly, I'd recommend you avoid AMD CPUs until Zen comes out.
So here we go:
Monitor: Literally whatever you can find. I recommend finding a used one on ebay. The triple monitor solution isn't a great idea, and I don't recommend it. -$70
Keyboard and Mouse: Whatever is cheapest. There are nice combos that go for $20-25, and work great - $25
* I'm assuming you are in India, and I'm not sure what the price of computer parts is in that area of the world, so look at whatever retailers you have available, and compare prices in there.
G3258 <--Beast of a value processor -$70
PSU <--- EVGA 430W 80+ Bronze. It'll do - $30
Case <--- Whatever's cheapest and fits-$35
Motherboard <--- AsRock H97M anniversary (you can overclock the g3258 with this) - $70
RAM <--- 8gb of 1600MHz (find the cheapest one) - $40
Cooler - use the stock cooler -$0
HDD <--- I'd recommend a WD Blue, but don't go over $50 on this -$50
GPU <--- Splurge on this. Get yourself a nice 480. - $250/ Or maybe a 960 -$200
Windows License - $100
 
This setup will crush nearly any kind of 1080p gaming, and it'll do it within your budget
 
Here a PCPartPicker list of items that'll do nicely:
http://pcpartpicker.com/list/mFG4nn

BTW, no you don't need an AMD cpu. You'll be able to get a decent rig without having to get one, and frankly, I'd recommend you avoid AMD CPUs until Zen comes out.
So here we go:
Monitor: Literally whatever you can find. I recommend finding a used one on ebay. The triple monitor solution isn't a great idea, and I don't recommend it. -$70
Keyboard and Mouse: Whatever is cheapest. There are nice combos that go for $20-25, and work great - $25
* I'm assuming you are in India, and I'm not sure what the price of computer parts is in that area of the world, so look at whatever retailers you have available, and compare prices in there.
G3258 <--Beast of a value processor -$70
PSU <--- EVGA 430W 80+ Bronze. It'll do - $30
Case <--- Whatever's cheapest and fits-$35
Motherboard <--- AsRock H97M anniversary (you can overclock the g3258 with this) - $70
RAM <--- 8gb of 1600MHz (find the cheapest one) - $40
Cooler - use the stock cooler -$0
HDD <--- I'd recommend a WD Blue, but don't go over $50 on this -$50
GPU <--- Splurge on this. Get yourself a nice 480. - $250/ Or maybe a 960 -$200
Windows License - $100
 
This setup will crush nearly any kind of 1080p gaming, and it'll do it within your budget
 
Here a PCPartPicker list of items that'll do nicely:
http://pcpartpicker.com/list/mFG4nn

Yes it should work.

To say his PC was a piece of crap, is to say the Atlantic Ocean is damp.