Linux Server - Homebuild or a Refurb

Not quite sure if this is the proper forum to ask in, and if not, I apologize. I'm looking to build/buy a server that will be used for a husband/wife small business. Will be running a webserver, mailserver, one or 2 VMs and a forum with an average of a 100-200 users online.

My budget is a bit limited and while I could go with some type of VPS/Dedicated at a hosting company, I can install my own server for free at work without the monthly costs, with just as much reliability (generator, etc).

So, back to the limited budget. I'm stuck around $900-$1000 bucks. I see 2 options at this point. I have a 4u rackmount case, but really can't afford server components, so I can build my own with desktop components or buy a refurb:

Option 1: (Build a server with desktop components)

Phenom II X4 955
ASUS M4A78-EM Motherboard
8 gigs of ECC unbuffered Ram
2 WD Caviar Black 500GB 7200 RPM SATA 3.0Gb/s (Software Raid 1)
650 Watt Corsair Power Supply


Option 2: (Buy a refurbished 1u):

Something like: Dell PowerEdge 1850


I'm just not quite sure which way to go with the budget I have. Any advice would be appreciated.

Thanks for the advice.

On the power supply, since it's a rackmount 4u, will this take a standard desktop power supply or does it need a server PSU?

On the motherboard, not quite sure I follow on the corporate stable version. This is the one I was looking at, since it's one of the few that will handle ECC memory: ASUS M4A78-EM Motherboard And everything I've read said ECC memory for a server is pretty much a must have.