The Studio XPS 9000. I remember when me and my dad got one of these, and we had quite a bit of fun upgrading it. The only original parts left in my dad's machine are the Case, the Motherboard, and the CPU.
So you just happened to stumble upon one of dell's best computers in 2010, and you bought it for your grandparents.
The 475W Power Supply should be adequate for most anything they will ever need, unless it involves really high-end graphics cards.
it needs a new hard drive
I will recommend to you the same I got for my dad: A WD Caviar Blue 500GB (what's actually in his rig), or a Segate Barracuda equivalent.
Everything I recommend here will have links at the bottom.
And this is where I start asking questions.
What are they going to be doing with the computer? Do they need any special outputs to connect with monitors?
For the average person, a Radeon 5450 is AMAZING. I have a favorite Radeon 5450 card which I I have installed in my computer now. I will have a link at the bottom.
Also a monitor would be great
This is where things start to get expensive. A good monitor is going to cost around $150-$225. The best people who make monitors are:
Acer (I have an acer, and it's great.)
ASUS (My Dad's ASUS looks beautiful!)
LG (I have no personal experience with LG, but I hear great things about them)
Dell (They OWN the low-cost monitor market)
I can give you my recommendations, but it's really up to you to decide which monitor looks the best, performs the best, and will fit your grandparent's needs.
I have 600 dollars for all of this
That's actually plenty of money. A Radeon 5450 is going to cost you around $30.
Hard drives are going to also be a bit expensive. The WD Caviar Blue goes for $55 on Newegg, but
it doesn't come with a SATA cable or any mounting screws. The Segate comes with a SATA cable, a legacy hard drive power to SATA power adapter, and mounting screws. But is costs $10 more. If you have a broken hard drive already in there, or you have hard drive screws lying around, buy the WD. But if not, you have to get the Segate, which is actually better than the WD in the first place.
Monitors are going to be expensive. Acer makes great monitors of all sizes, so I would check out their website. Also check out ASUS's website, they have amazing monitors too.
Links:
WD 500GB Hard Drive (no screws or cables):
http://www.newegg.com/Product/Product.aspx?Item=N82E16822136769&cm_re=wd_blue-_-22-136-769-_-Product
Segate 500GB Hard Drive (with screws and cables):
http://www.newegg.com/Product/Product.aspx?Item=N82E16822148221
AMD Radeon 5450(the better one): http://www.newegg.com/Product/Product.aspx?Item=N82E16814150655