so all that is lacking is a power supply and a graphics card. I don't really know what to recommend on the graphics card cause he doesn't use it to watch movies or play games or do anything advanced or technical. With that said he's not completely tight on money so a tad extra power in the right places would be ok.
Ultimately the price range goes from 600 - 1000 but since he really doesn't need a heavy duty machine as close to 600 without any sacrificing.
All recommendations welcome be they upgrading or downgrading what I have posted already.
Monitor resolution unknown but i could get it if really necessary.
first of all an upgradable rig isn't easy to build now since that both am3,1166 and 1366 or said to dissapear next year and people ussually add a gpu for power but thats for gamers. So as for upgradebility its going to be close to 0.
The i5-650 has a graphics processor on the package, so you could just use that instead of buying a discrete graphics card. It will only work with the correct chipset: H55, H57 & Q57 (I think). People usually recommend getting the i5-750 which is a quad core, so might be more futureproof and better for general system usage, altho it doesn't have integrated video, so if you chose that then you would need a graphics card.
If you want upgradeability in terms of being able to add a powerful gaming graphics card then the minimum I'd recommend would be a good 650W, otherwise even something with as little power as this would be fine: Antec EarthWatts Green EA-380D $40
2) As for your PSU, I would make this change to your Case and pick up this power supply in a combo. It is overkill but gives your friend room to grow and make this system a gaming system down the road.