As far as new computers from a reputable manufacturer, they don’t get much cheaper than that and I would be very suspect of one that was. It looks like a pretty good deal. Of course, any reasonably modern laptop (less than 6 years old) would probably be fine as well and it is possible to find one of those for very little or even free if you get lucky.
The problem is that most laptops that people formally put up for sale are generally overvalued for what they are and often by a lot. You can find cheap laptops and you can find good laptops but it is difficult to find a cheap laptop of good quality on sites like E*Bay.
I work in IT and run run across both individuals and computers that just give pretty good computers away pretty frequently. People that have newer ones often aren’t interested in going through a formal sale so they just hand them out. Unfortunately, my SIL who is poor at the moment asked me this same question last week and I told her that but I don’t know where any free or good cheap ones are at the moment.
The Circuit City and Best Buy notebooks on sal for 500 or so are also (generall) good deals. Of the Dells I’d suggest paying $ 50 more for the faster 15 inch screen B130 vs the slower 14 inch B120. A 256 meg mem chip to bring them to parity is quite inexpensive.