Given the nVidia's history of unreliability it's almost certainly a correct diagnosis.  Unfortunately, this system doesn't have a video card - the chip is part of the system board, so the entire board needs to be replaced.  There is no way to use any external video card -- you must have the mainboard replaced.

If the system is less than a year out of warranty, Dell has  a 12-month extension to cover the replacement.  If it's older than that, I would strongly suggest that if you want to have the system repaired, you purchase the Intel-video version of the board -- many are convinced there is no true fix for the faulty engineering of the nVidia chip, and all of the replacement boards you'll find will be used and of similar vintage.  That is, the chip WILL fail again.

The Intel version does require a different heatsink but is significantly less troublesome than the nVidia one.

 

Here's the Dell extension info:

http://en.community.dell.com/blogs/direct2dell/archive/2008/08/18/nvidia-gpu-update-dell-to-offer-warranty-enhancement-to-all-affected-customers-worldwide.aspx

This is the Intel video board for your system:

http://www.parts-people.com/index.php?action=item&id=4356