I don't think anybody was really listening to the guy here. He said the system needs very little in the way of capacity and needs to be cheap. We must step outside the box here.
OK, ARE YOU READY?! This is it!. Hold on, and yes, all parts are compatible. Best build at a low budget and will not not slow down or clog up. If you want to go cheaper just scour the local ads for used broken pcs and build it from there.
Mobo, comes with 1.8 Ghz dual core Intel and on board video card. $74.99.
http://www.newegg.com/Product/Product.aspx?Item=N82E16813121442
Kingston memory compatible with board, 2 GB stick. $14.99
http://www.newegg.com/Product/Product.aspx?Item=N82E16820139220
Pc case, with power supply, one external bay and one internal. $49.99
http://www.newegg.com/Product/Product.aspx?Item=N82E16811144255
Sony DVD/CD player, $23.99
http://www.newegg.com/Product/Product.aspx?Item=N82E16827118031
That one complete functioning computer for $163.96 SHIPPED! or £103.61
Hey! What about the operating system. You can do Window7 for $99 at the same website if you like. I scoured around and xp is just a few bucks cheaper. But if you're reeeeeeally looking at keeping cost down . . . how's about $0.0 for a full operating system? Comes with word processing software, paint, and other goodies. It's called UBUNTU, download it for free onto a cd and add it on. Voila.
Now peripherals.
Monitor.
LED backlit 18". $89.99 + $8.99 shipping
http://www.newegg.com/Product/Product.aspx?Item=N82E16824254061
Keyboard, $5.99.
http://www.newegg.com/Product/Product.aspx?Item=N82E16823201029
Mouse, $4.99.
http://www.newegg.com/Product/Product.aspx?Item=N82E16826193041
Peripheral $109.96 or £69.17
Grand total for one complete pc is
$273.92 or £172.30
Now all that said. I still say, going for an already build unit is better. You may get better performance pound per pound and there's always that warranty. If you're going new it's good to have. But if you're really, really, really on a budget. Dude! Just get a used pc. Pound per pound it'll beat all the above options. Hope this helps.