Be careful of a setup that cheap. I did that contest myself to see how cheap I could build my own computer and still have it be decent. I squeaked in at $400 and I had a few parts myself already.
The motherboard, processor, and video card by themselves should cost at least $250 for any decent system that you will enjoy and will last.
You really are better off buying a system from one of the big sellers if you want something in the cheap range. They have much better buying power than someone buying individual parts at near retail. Midrange and above is where you can do well with home building (unless you already have a lot of good parts).
Even if your friend knows how to obtain an “OEM” copy of Windows, that’s still about $100, leaving only $150 for the motherboard, processor, case and drives. Seems unlikely that they can actually be successful at that price.
Pay too little, and you’re apt to wind up with an unregisterable copy of Windows which will bite you hard down the line when you’re unable to get any security updates for it.
I know you didn’t mention it as an option, but any decent laptop sounds like it should be better than what you have now, run the games you mentioned, and cost ~$600. It won’t be anything fancy, obviously, but that should get you a decent little machine w/ a 15" screen.
Well, if you are getting the monitor separately, the sweet spot seems to be in 19 inch. They are not much more than the 17 inch monitors. Consider a 19 inch widescreen monitor even some of those are not all that much. The main thing to consider there is if your graphics card will support it.
You will probably want a DVD writer as well as a plain dvd/cd player. Games often won’t play on DVD recorders. I second the gig of RAM. Get at least a 100 GB hard drive and seriously consider a 250 GB one. I saw one for fifty cents a gig. You want USB ports, front and back. Back for printers and mice, front for flash drives. Buy a flash drive, I bought one for $45 for a gig, smaller ones cost less. I back up my important docs to it, then I make a cd of that. I also use it like I used to use a diskette.
If you like simulation games, consider looking at the specs for Spore and build to that. I built/specified my last one to run current games and the one before that for the next version of photoshop. Now, more than five years later, the the older of the two is still running the current version of office without trouble.
Processors: Cache matters. A fast processor with no cache will be slower in use than a moderate processor with a decent cache. Cache makes a huge difference. I still like my Xeon 2.4 GHz almost 3 years after I bought it.
So, say good-bye to viruses and crashing and get yourself a nice, shiny new Mac. My pc is about to go toes up, and I’m pretty sure I’ll be buying a Mac next time.