Old CPU's no longer support Hardware Acceleration, so my 1070's wasted?

I agree with MyerPj. What you have here is a woefully imbalanced (in terms of relative performance) system: Way too much GPU for the CPU that you're currently using. Imagine a car that's equipped with a Honda Civic 4-cylinder engine and an automated manual (aka "dual-clutch") transmission from a high-end Mercedes Benz. That's what you currently got. The transmission will not mate well with that small engine to begin with. And since a GTX 1660 would have been a nice match for a 7th-generation i5-7600K, the i5-2500K is significantly weaker than the 7600K, so even a GTX 1060 is overkill for that 2500K. Unfortunately, the i5-2500K is weaker (in terms of relative performance) than most of the recent-generation NVIDIA GPUs, with the possible exception of the GT 1030 (which itself is weaker than the i5-2500K). Hence, there are no suitable matches for a GPU to compliment that i5-2500K unless you go with an outdated or obsolete GPU, such as a Kepler-generation GPU (GTX 600 or 700 series) that will soon become EOL'd in driver support by NVIDIA itself (43x.xx and higher drivers already no longer support Kepler-generation mobile GPUs).

And your expectations that the GPU will make up for a weakling CPU is misguided. No upgraded GPU will ever compensate for an underpowered CPU.

And you do not currently have hardware encoding because by default the integrated Intel HD Graphics (also known as the iGPU) is disabled when you install a discrete GPU and have all of your displays connected only to the discrete GPU card. Hardware H.264 encoding REQUIRES the integrated Intel graphics to be ALWAYS ENABLED! Unfortunately, your system may not have the provision to enable the iGPU in the EFI/BIOS with a discrete card installed, or makes it more difficult than it needs to be just to enable the iGPU by burying this setting underneath a bunch of unrelated settings. I know Asus and Gigabyte: With Asus, the iGPU Multi Monitor Support needs to be enabled, while with Gigabyte the iGPU itself needs to be set to Enabled (default is Auto).

PP will use your 1070 depending on what you are doing. But you don't have a balanced system, too much GPU for CPU.

Here's some screenshots of Task Manager whiled creating 720p cineform proxies from h.264 4K Uhd.

PP 2019 - Making Proxies - Runs Well wTask Manager

Check out the GPU Accelerated Effects List which is in a FAQ on the Overview page of the forum.

Premiere uses GPUs for things like color changes, Warp Stabilizer, resizing or transforming media. And as the CPU needs what it will be assigned to do.

But not for general rendering.

The hardware/software encoding comments in the Summary section of the Export dialog are only referring to whether or not your CPU has the Intel QuickSync feature inside and enabled in the BIOS. And of course you only see this for H.264 format encoding.

That has nothing whatever to do with the GPU being used or not.

Neil