Don't be so afraid of messing anything up. Someone will probably argue with me, but it's actually pretty hard to severely damage components as long as you use common sense and have a basic knowledge of what your doing.
I hear a lot of stories about people putting together a computer and (for example) buying DDR RAM when they needed DDR2, but they didn't care or know the difference; so they force it into the socket like someone trying to force a puzzle piece into a place it doesn't belong. (If you have to use a hammer to install your hardware... you're not doing it right.) So what usually happens? The computer throws a fit, sparks fly, and maybe it catches fire. They decide that they must have gotten defective hardware and that the manufacturer is clearly to blame.
In all seriousness: if you take basic precautions, there's like a 95% chance that everything will be as smooth as butter.
With that said, The cheapest Intel processor that I would recommend (the i5 750) is $200 which puts it out of your budget range, but AMD has some nice options with good upgradability and performance.
Anyway, here's what I came up with:
--
COMBO DEAL--
AMD Phenom II X2 550 Black Edition Callisto 3.1GHz
ASUS M4A79XTD EVO AM3
$197
Samsung F3 500GB
$55
OCZ StealthXStream 700W
$75
mushkin XP 2 x 2GB DDR3 1600
$100
XFX Radeon HD 4770
$110
LITE-ON SATA CD/DVD Burner
$29
TOTAL:
before MIR ~$563
after MIR ~$528
You probably noticed I didn't include a case... The case is something that's hard to recommend without knowing what your looking for. Side window? Color? Design? Features? Antec makes some great cases as does Cooler Master. The Antec 900 is the most popular "gamer's case" for good reason: it's designed really well. Expect to spend around ~$100 on a good case.
You'll also want a good aftermarket cooler if you plan on overclocking which will run you around ~$50.
If you can find one, upgrade your video card to a 5770 which is compatible with DX11 and will have a longer lifespan than the 4770. That will cost you another ~$50.
Let me know what you think.