First off, go to Fatwallet.com and go to "compare prices" I find this a much easier thing to use (and more vendors covered).
Some of the stuff I know I want/need:
Pentium 4
512 MB
Apx. 2.6 Gigbyte processor
Regular Floppy drive
-I'd say get an AMD Athlon XP 2400/2600+ instead of a P4. This will save you hundreds. Now I'm not only saying that because I'm an engineer at AMD (I swear). I'd say you should buy AMD regardless since they're cheaper and you get more performance for you money. I'm fairly sure most ppl would agree with me here.
-Depending on the board (and chip) the RAM could be more expensive. If you have a higher FSB (which is good), you may need to buy RAM that has a higher FSB as well to have the best performance. The only down-side is the higher the FSB, the higher the price (but you get performance).
20 megs of Hard Drive space (however 40 would be nice). I have an 80 meg slave drive I'll be installing.
-I think you meant Gigs instead of megs unless you're making realmedia files

. As for HDs, there are some nice Western Digital rebates going around. If you have a Fry's around, just go there. If not, go to Outpost.com since they carry the rebates (and are Fry's parent company). I got an 80 GB for about 80 bucks the other week. 20 should be a lot cheaper.
I guess this is what I'd suggest (VERY quick look at products):
-Motherboard: KT400 from Soyo (at 333 Mhz FSB) ~$100.00
-Processor: Athlong XP 2600+ (2.133 Ghz Socket A, 333 Mhz FSB, like motherboard) ~$234.00
-RAM: Corsair 512MB PC2700 (333 Mhz FSB) DDR-SDRAM DIMM w/ Heat Spreader ~$96.00 (Corsair is debateably the best)
-Hard-Drive: Western Digital Special Edition Caviar 80GB (EIDE, Ultra ATA/100, 7200 RPM) - You definitely want "special edition" since it has the 8 MB (instead of 2) cache. This makes for faster access times. ~$96.00
-Case /w powersupply - Perhaps an Antec with 300 (or more) W powersupply. Depending on how "aesthetically pleasing" you want it (like clear sides), this coule be ~$100.00
Total: $626.00
The CD-RW, Keyboard, Mouse, Graphics card and Sound card can easily be switched in from the old computer (unless they are ancient). Since you got the extra cash, I'd suggest getting a good GeForce4 card with Video-in/Video-out as opposed to a capture card. My Geforce 4 TI4200 captures 720x480 at 29.97 fps losing no frames and it's not a special capture card...just standard video-in.
Hope this helps (and makes sense).