What is the difference between an Intel Core i5-650 3.2GHz, and a Pentium Dual core E6700 CPU/ 3.2GHz/ LGA775 ?

Both processors are not interchangeable because both belong to a different socket platform. That might be the biggest difference of all.

There are 2 Major differences, which are:

1.The i5-650 belongs to a newer platform, so the IPC/efficiency is around 10%-15% greater. Basically, even though both processors are clocked at 3.2ghz, the Core i5-650 would be 15% faster in single threaded performance. 

2. The Core i5-650 has Hyperthreading so it can address 4 threads. The OS will see the i5-650 as being a quad-core, but only because it has 2 extra virtual cores. This gives the Core i5-650 a significant advantage over the Pentium in multi-threaded workloads.

However, as the other poster pointed out, both processors are fairly obsolete. These are nothing compared to a Core i5-3470 which is also showing it's age.

The i5-650 was also made on the 32nm process whereas the e6700 is a 45nm processor, the i5-650 also has more cache. The e6700 can be used on lga775 motherboards which support either DDR2 or DDR3 whereas the i5-650 only works with DDR3. Some of this has to do with lga1156 processor having the memory controller embedded in the CPU while the old lga775 processor have the memory controller on the motherboard. 

You could probably do some websurfing comfortably with a system that has a Core i5-650, 8gb of RAM, and a SSD. The Pentium e6700 would be painfully slow with even websurfing. 

They're both long obsolete, so you really shouldn't be buying either. The i5 will turbo up to 3.4 GHz, has a larger L2 cache, 2 additional hardware threads, and support for additional instructions like SSE4.2.