This spec is just a bit over budget, running about $20 more expensive than Pedro's list but it does have the advantages of faster CPU/GPU & double the RAM/HDD size.
Case
Antec Three Hundred Black ATX Mid Tower
Newegg.com - Antec Three Hundred Black ATX Mid Tower Computer Case - Computer Cases
$59.95
PSU
OCZ StealthXStream OCZ500SXS 500W ATX12V / EPS12V Active PFC PSU
Newegg.com - OCZ StealthXStream OCZ500SXS 500W ATX12V / EPS12V Active PFC Power Supply - Power Supplies
$59.99 - $30 rebate = $29.99
Optical Drive
LITE-ON Black DVD Burner with LightScribe - Retail
Newegg.com - LITE-ON Black 20X DVD+R 8X DVD+RW 8X DVD+R DL 20X DVD-R 6X DVD-RW 12X DVD-RAM 16X DVD-ROM 48X CD-R 32X CD-RW 48X CD-ROM 2MB Cache SATA 20X DVD±R DVD Burner with LightScribe - CD / DVD Burners
$29.99
GPU
EVGA GeForce 9600GT Superclocked 512MB PCI Express 2.0 x16
Newegg.com - EVGA 512-P3-N862-AR GeForce 9600GT Superclocked 512MB 256-bit GDDR3 PCI Express 2.0 x16 HDCP Ready SLI Supported Video Card - Desktop Graphics / Video Cards
$119.99 - $20 rebate = $99.99
CPU
Intel Core 2 Duo E7200 Wolfdale 2.53GHz 3MB L2 Cache LGA 775 - Retail
Newegg.com - Intel Core 2 Duo E7200 Wolfdale 2.53GHz 3MB L2 Cache LGA 775 65W Dual-Core Processor - Processors - Desktops
$119.99
RAM
Mushkin 4GB (2 x 2GB) 240-Pin DDR2 SDRAM DDR2 1066 Dual Channel Kit
Newegg.com - mushkin 4GB (2 x 2GB) 240-Pin DDR2 SDRAM DDR2 1066 (PC2 8500) Dual Channel Kit Desktop Memory - Desktop Memory
$129.99 - $25 rebate = $104.99
Mobo
ASUS P5K PRO LGA 775 Intel P35 ATX Intel Motherboard - Retail
Newegg.com - ASUS P5K PRO LGA 775 Intel P35 ATX Intel Motherboard - Intel Motherboards
$104.99
HDD
Seagate Barracuda 500GB 7200 RPM 16MB Cache SATA 3.0Gb/s - OEM
Newegg.com - Seagate Barracuda 7200.10 (Perpendicular Recording) ST3500630AS 500GB 7200 RPM 16MB Cache SATA 3.0Gb/s Hard Drive - Internal Hard Drives
$69.99
OS
Microsoft Windows Vista 64-Bit Home Basic DVD - OEM
Newegg.com - Microsoft Windows Vista 64-Bit Home Basic for System Builders Single Pack DVD - Operating Systems
$89.99
Sub-total
$784.87
Ship to Brownsville, TX
$8.25
Sub-total + shipping
$793.12
Less Mail in rebates
$ 75.00
Grand Total
$718.12
Use mobo integrated sound, with room for an additional 4Gb of RAM, and LGA 775 is the current Intel socket so there are plenty of CPU upgrade options available.