First off, welcome to overclockers.com, and overclocking! I'm sure you'll love it here - now about your question:
I'm in the process of putting together a ~1gig system for a friend, for a little over £600 (£545+monitor). Normally I wouldn't buy a pretested cpu, but I found it was cheaper to get a bundle deal with a globalwin FOP32-1 heatsink, a duron 750 guaranteed to a 950+, and a KT7a mobo than to buy them separately. Look around for bundle deals like this, they're a great way to save money (I bought from overclockers.co.uk, but I assume you're in the States). Then add a CDROM (no DVD or CDRW to keep costs down), a floppy, cheapo Creative speakers with SBLive! 1024, a good quality midi case with 300W psu, keyboard, mouse, 20gig IBM harddrive, 128MB CAS2 Crucial PC133 etc... et voila!
Oh yeah, I forgot the video card - lol. GF2MX, or if you can afford it a Radeon DDR. If your budget will stretch to a GF2 of any sort obviously go for that. FYI I found the best way to save money is to buy a second hand monitor - I've picked up a 17" before for £55, they cost well over £150 new!
My recommendations would be pretty much whatever duron you can lay your hands on - they all seem to oc great - with a KT7a mobo (cheap, jumperless, love the KT7), and for the vid card what I just said above.