Sorry, on demand is not a good way to state this, it's just how my weird mind thinks of things. By "on demand", I mean, like you are actively using it to store something or view something. If you're not intentionally doing something with it, the drive should be completely idle. That's more of a target than a requirement, though. It's a way to keep storage drives tidy and not littered with temporary cache files, or databases used to store runtime state by various services. It's just a strategy I like to take, to keep bulk storage separated from the applications and services that use it.
Even if a usb drive is intended to be permanently attached, it should still be treated as a temporary component. The reason is so that if something happens and the drive is disconnected, it limits the disruption to the system. You lose your media and documents until it's reattached, of course, but the computer keeps chugging along happily.
If you use it for writing log files, then its loss can disrupt those services (and also prevent the problem from being reported). Also it'll be constantly making noise, which can be annoying.
That's my reasoning, anyway, you might prefer it done differently.
I think with your budget you'd want to upgrade either your CPU or your GPU, but not both, and should first identify the bottleneck for each of your use cases. At a guess, I'd say GPU for starfield and possibly CPU for minecraft especially if you're using mods, but it's worth spending time measuring that and picking the direction you want to go. You can try smaller upgrades for each, but my sense is that it wouldn't sum up to as worthwhile upgrade as focusing on one.
An nvme drive would be nice, but I wouldn't prioritize it above cpu/gpu. I think 16GB of memory is fine for what you're wanting, and there's nothing wrong with that motherboard.
Used 2080ti's sell within your budget (and for less there are 2080 and 2080 supers on the market), and that would be a huge upgrade on the GPU side. Not a recommendation, just something to consider.