Here is a build. It includes everything but the OS (Edit: oops, and the drives!). The nickels & dimes added up quickly, but I think this system will serve pretty well, and there are plenty of ways to upgrade it as your budget allows:
GIGABYTE GA-MA785GMT-UD2H AM3 AMD 785G HDMI Micro ATX AMD Motherboard - Retail
Model #:GA-MA785GMT-UD2H
Item #:N82E16813128397
Current tech, AM3 so it will accept future upgrades.
$89.99 $89.99
AMD Phenom II X2 550 Black Edition Callisto 3.1GHz Socket AM3 80W Dual-Core Processor Model HDZ550WFGIBOX - Retail
Model #:HDZ550WFGIBOX
Item #:N82E16819103680
A Regor X2 might be tempting to make budget (you can still do that), but to maintain any kind of balance I think you'll want the stronger CPU. Really, a 710 or 720BE would be even better.
$114.99 $114.99
Rosewill R102-P-BK 120mm Fan MicroATX Mid Tower Computer Case - Retail
Model #:R102-P-BK
Item #:N82E16811147111
I've used this case, and it is simple and nice. Any of the cheap Rosewills will do; I chose this microATX to save space. I remember how cramped my dorm room was, and every last cubic foot counts.
$29.99 $29.99
Antec earthwatts EA380 380W Continuous Power ATX12V v2.0 80 PLUS Certified Active PFC Power Supply - Retail
Model #:EA380
Item #:N82E16817371005
Quiet, dependable, 80 Plus, and strong enough to power a 4850.
$59.99 -$10.00 Instant $49.99
Logitech Internet 350 Black USB Standard Desktop - OEM
Model #:967972-0403
Item #:N82E16823126018
Basic set, but the mouse has a tilt wheel on it, and I know I've come to love those.
$16.99 $16.99
Acer X193Wbd Black 19" 5ms Widescreen LCD Monitor with HDCP Support - Retail
Model #:ET.CX3WP.001
Item #:N82E16824009194
There are cheaper, but not with DVI. I think I've got one of these; might be my wife's. No troubles.
$129.99 -$10.00 Instant $119.99
Cyber Acoustics CA-2011WB 4 Watts 2.0 Amplified Computer Speaker System - Retail
Model #:CA-2011WB
Item #:N82E16836150055
Not the absolute cheapest, and I'm sure crappy, but this is just so you can hear something until you get better.
$8.99 $8.99
ENCORE ENLWI-N PCI 2.3 Wireless Adapter - Retail
Model #:ENLWI-N
Item #:N82E16833180052
Has mixed reviews, but I bought this for my wife's PC in a different room and down a [short] hall from my draft N router, and it worked perfectly, with -0- grief, and much faster than the b/g card it replaced.
$39.99 -$15.00 Instant $24.99
HIS H467QSS1GP Radeon HD 4670 1GB 128-bit DDR3 PCI Express 2.0 x16 HDCP Ready Video Card - Retail
Model #:H467QSS1GP
Item #:N82E16814161273
Yes, this card will game, particularly at 1440x900. For only $30, you can get the XFX 4850 that exhausts its heat (and the Earthwatts 380 can power it), but you look at your budget and make that call.
$79.99 $79.99
G.SKILL 4GB (2 x 2GB) 240-Pin DDR3 SDRAM DDR3 1333 (PC3 10666) Dual Channel Kit Desktop Memory Model F3-10666CL7D-4GBPI - Retail
Model #:F3-10666CL7D-4GBPI
Item #:N82E16820231200
After mushkin, I've had good results with G.Skill RAM. You can get slower for cheaper, but I think this is more worthwhile.
$74.99 $74.99
Subtotal: $610.90
And there you have it. As you contemplate upgrades, I would suggest keeping the CPU high on the list, even though a GPU upgrade to a 4850 is very tempting. Accessing your school's LAN will no doubt require a layer or two of security software, and somewhere among the game-playing you'll need to get some real work done too. You'll probably also want to play music, or your roommate will want to stream something you've downloaded while you're playing, or............
Oops, and I just realized I forgot the drives. Hmmm, that's another $75; uh oh...
Edit: Dropping back to AM2+ and using DDR2 would save maybe $30-$40 but I think it would be penny wise and pound foolish, buying yourself too many future limitations. You could "save" $40 by getting a Regor X2 CPU, but that would just end up as money wasted; it would make more sense to spend $5 MORE for the 720BE (would have been more yesterday).