You have left out valuable info, e.g., what's your budget, how will you back it up, which operating system will be installed, what downtime is accetable if the server fails, do you already have a UPS, what Ethernet switch is installed, etc. Why would you build a server when you could buy one from Hp, Dell or IBM? If it fails, you'll have to fix it yourself and unless you buy server components that will be available for the next several years, you may have difficulties finding replacement parts. In a business environment, buying a server usually makes more sense unless you are available 365 days a year to support it. I definitely wouldn't build a server for an environment with that many users. If downtime for more than a few hours isn't acceptable, then buy the server along with a support plan that meets your requirements.
A file server for 120 users doesn't need to be very powerful because the bottleneck will most likely be the LAN, even if you use two Gigabit interfaces. I would suggest a RAID0 for the boot drive and RAID 5 for the other two arrays.
You have to come up with clear requirements and then contact Hp, Dell and IBM for a proposal. You also need to know what your maximum budget is. Does the configuration need to include a backup solution (tape, external disks or remote backups)? What about the operating system? Do you already have a UPS?
Man I wish I could be as clueless as oktobar and still get paid to build a server!
I second what GhislainG said, you are much better off buying the system from some reputable vendor as they will have much better support than a single person will and by the looks of it will have much more experience with servers and server problems that you will.