not good nothing in a computer should be making a smell unless its seized up and or overheating
a capacitor can overheat and leak oil making a burning smell

take the case off make sure all the fans are moving freely and smoothly

Unfortunately, in this case, I'm on a laptop. Blew the thing out this morning with my air compressor before I turned it on. No smell yet :p

This machine has been teetering on its last leg for... criminey, almost two years now. That's sadly impressive. Caught a nasty virus that ripped out the registry when I removed it, put it through at least half a dozen of different OSes, all the while running software that has been on the high edge of its capabilities. Plans are to get a refurbished Macbook in the soon time.

on a laptop any burning smell
fan dust issues
battery is going out

yeah mine is on the long end of age too (ibm G40) its video an cpu chug at SL now it hates more than a browser open it will run winamp and word but stutters when word saves ive been building a new machine but the remaining parts have to wait till after AC