At that price including the monitor (which will eat $150) you should look at an AMD Athlon II x3 435 CPU, AM3 motherboard, 4GB (2*2GB) DDR3-1333 RAM kit, 500GB single platter hard drive (Samsung F3 or Seagate 7200.12), Radeon 5770 graphics card and a 21.5 inch widescreen LCD. For a case look at the Antec 200 with around a 500W Antec PSU like the Neo Eco 520C.
You could also look at the "recommended build by usage" sticky to get some ideas on parts lists.
After taking everyone's advice and adjusting my budget a little bit this is my proposed build.
CPU: AMD Phenom II X4 945
CPU FAN: AMD BLACK EDITION COPPER HEATPIPE
MOBO: Gigabyte GA-MA785GMT-UD2H AMD785G
GPU: ATI RADEON HD 5770 1GB
RAM: GSKILL Ripjaws Series 4GB (2 x 2GB) 240-Pin DDR3 SDRAM DDR3 1600
HD: WESTERN DIGITAL 500 GB 7200 RPM 16M CACHE
OPTICAL LITE ON 22X DVD DUAL LAYER +R/RW -R/RW
PSU: OZC STEALTH X STREAM 700W
CASE: COOLERMASTER ELITE 310
CASE FAN: 120MM DC FAN