In the quest for a quieter computer I'd like to know, does a 350W psu need a fan if it is externally mounted? Also, would wood veneer help or hurt the psu's ability to stay cool (I would not block any vent holes and could add any more that were needed)?
Yes it needs a fan - even with no load it's likely to consume 30W+ which is a fair bit to dissipate without larger heatsinks. Assuming it's not a new branded one, I'd guess it's also not all that efficient, so heat can definitely become more of an issue.
you can buy psus at rating of about 300watts that are passive http://www.extensiontech.net/reviews/ad/coolmax/quietpsu/ http://www.guru3d.com/article/content/41/
It's usually safe to swap the fan to a quieter model, especially in generic supplies where the fan used is a cheapie. Aim for at least 24cfm (eg, Panaflo L1 80mm), though for genuine low noise you need to be looking at PSUs with thermally-controlled 120mm fans like the Seasonics.
So it seems the consensus is replacement (the fan or the PSU)... I was hoping to run one less fan but oh well. Thanks for the input!