$550 Gaming Build

Get him an APU

You're overspending on the PSU, got a mid-range GPU, and the CPU is a not very good. I'll be back with a parts list.

PCPartPicker part list / Price breakdown by merchant / Benchmarks

CPU: AMD Phenom II X4 965 Black 3.4GHz Quad-Core Processor ($89.99 @ NCIX US)
CPU Cooler: Cooler Master Hyper 212 Plus 76.8 CFM Sleeve Bearing CPU Cooler ($19.99 @ Newegg)
Motherboard: Asus M5A97 ATX AM3+ Motherboard ($84.99 @ NCIX US)
Memory: G.Skill Value Series 8GB (2 x 4GB) DDR3-1333 Memory ($33.99 @ Newegg)
Storage: Samsung Spinpoint F3 1TB 3.5" 7200RPM Internal Hard Drive ($88.98 @ Newegg)
Video Card: Sapphire Radeon HD 7770 1GB Video Card ($114.99 @ NCIX US)
Case: Cooler Master Elite 430 ATX Mid Tower Case ($36.99 @ Newegg)
Power Supply: Corsair Builder 500W 80 PLUS Certified ATX12V Power Supply ($34.99 @ NCIX US)
Optical Drive: LG GH24NS90 DVD/CD Writer ($16.99 @ Newegg)
Total: $521.90
(Prices include shipping and discounts when available.)
(Generated by PCPartPicker 2012-09-13 20:50 EDT-0400)

This is about as good as a gaming rig you're going to get for this kind of budget. And this is without an OS. If your friend wants something with beefier graphics, I'll make a Dual Core build.

Keep in mind Dual Core chips are still very modest today, and for this kind of price point, Intel's SB Pentiums can't be beat.

PCPartPicker part list / Price breakdown by merchant / Benchmarks

CPU: Intel Pentium G850 2.9GHz Dual-Core Processor ($69.99 @ Mac Mall)
Motherboard: ASRock H77M Micro ATX LGA1155 Motherboard ($69.99 @ Newegg)
Memory: G.Skill Value Series 8GB (2 x 4GB) DDR3-1333 Memory ($33.99 @ Newegg)
Storage: Samsung Spinpoint F3 1TB 3.5" 7200RPM Internal Hard Drive ($88.98 @ Newegg)
Video Card: HIS Radeon HD 7850 2GB Video Card ($199.99 @ Newegg)
Case: Cooler Master Elite 430 ATX Mid Tower Case ($36.99 @ Newegg)
Power Supply: Corsair Builder 500W 80 PLUS Certified ATX12V Power Supply ($34.99 @ NCIX US)
Optical Drive: LG GH24NS90 DVD/CD Writer ($16.99 @ Newegg)
Total: $551.91
(Prices include shipping and discounts when available.)
(Generated by PCPartPicker 2012-09-13 20:53 EDT-0400)

Again, this is without the OS.

Depending on your friends resolution, I would agree with guerrero on the suggestion of an APU, it may be the best choice for this kind of price point.

But as far as 1600x900, 1920x1080 resolution gaming goes, this is what you would want minimum.

What will he be using this for?
*which games

+1 great question

If he's going to use this rig for games such as WoW or F2P MMO's, he won't need something this powerful.

He plays in 1080p. And he needs an OS. He has $50 in amazon credit and he also needs an OS so that would be $40 for 7 64 bit. So he's really on a $600 with $50 of that being amazon credit.
http://pcpartpicker.com/p/hnH7
Total is $604-$50
How is it?

He is planning to play ArmA 2(possibly 3 when it comes out), Call of Duty, Minecraft, World of Tanks, Mount and Blade Warband, Civilization 5, and Skyrim. And any others he decides to purchase. We youtube so he needs some decent graphics.

When you mean "we youtube" do you mean that you will be recording while you are playing?

Will he be overclocking?
I also think the psu is a little overkill, spend more money on the gpu or cpu instead.

Also +1 to Mocchan's AMD build. If you have extra money i might even up the psu to 550w to be safe but I think its solid.

PCPartPicker part list / Price breakdown by merchant / Benchmarks

CPU: AMD Phenom II X4 965 Black 3.4GHz Quad-Core Processor ($89.99 @ NCIX US)
CPU Cooler: Cooler Master Hyper 212 Plus 76.8 CFM Sleeve Bearing CPU Cooler ($19.99 @ Newegg)
Motherboard: Asus M5A97 ATX AM3+ Motherboard ($84.99 @ NCIX US)
Storage: Western Digital Caviar Blue 500GB 3.5" 7200RPM Internal Hard Drive ($62.99 @ SuperBiiz)
Video Card: MSI Radeon HD 6850 1GB Video Card ($139.99 @ NCIX US)
Case: Antec Three Hundred ATX Mid Tower Case ($39.99 @ NCIX US)
Power Supply: Corsair Builder 500W 80 PLUS Certified ATX12V Power Supply ($34.99 @ NCIX US)
Optical Drive: LG GH24NS90 DVD/CD Writer ($16.99 @ Newegg)
Operating System: Microsoft Windows 7 Home Premium SP1 (64-bit) ($90.26 @ Amazon)
Total: $580.18
(Prices include shipping and discounts when available.)
(Generated by PCPartPicker 2012-09-13 21:19 EDT-0400)

Swapped out a few parts for you, this is much better optimised.

There we go, I like this one!
Do you think he needs the cpu cooler?

Yes, he will if he plans to overclock his CPU   (which I highly recommend, btw)

**EDIT**

Give me a moment, I forgot to add RAM *facepalm* what a stupid mistake.

Here we go... $614+$50, only $10 over-budget than what you originally had, but it's worth every penny.

PCPartPicker part list / Price breakdown by merchant / Benchmarks

CPU: AMD Phenom II X4 965 Black 3.4GHz Quad-Core Processor ($89.99 @ NCIX US)
CPU Cooler: Cooler Master Hyper 212 Plus 76.8 CFM Sleeve Bearing CPU Cooler ($19.99 @ Newegg)
Motherboard: Asus M5A97 ATX AM3+ Motherboard ($84.99 @ NCIX US)
Memory: G.Skill Value Series 8GB (2 x 4GB) DDR3-1333 Memory ($33.99 @ Newegg)
Storage: Western Digital Caviar Blue 500GB 3.5" 7200RPM Internal Hard Drive ($62.99 @ SuperBiiz)
Video Card: MSI Radeon HD 6850 1GB Video Card ($139.99 @ NCIX US)
Case: Antec Three Hundred ATX Mid Tower Case ($39.99 @ NCIX US)
Power Supply: Corsair Builder 500W 80 PLUS Certified ATX12V Power Supply ($34.99 @ NCIX US)
Optical Drive: LG GH24NS90 DVD/CD Writer ($16.99 @ Newegg)
Operating System: Microsoft Windows 7 Home Premium SP1 (64-bit) ($90.26 @ Amazon)
Total: $614.17
(Prices include shipping and discounts when available.)
(Generated by PCPartPicker 2012-09-13 21:25 EDT-0400)

I dont see why he needs 4 cores for that

I can see Skyrim, Civ5 and Arma 2 benefiting from the extra cores IMO.

http://pcpartpicker.com/p/ho38

windows 7: http://www.softwaresupplygroup.com/microsoft-windows-7-... $68.99

I'm using th 4100 with a GTX 560 and playing ArmA on high so he doesn't mind medium-lowish. And I agree with mocchan, some games do benefit from having 4+ cores.

And he wants to run mods in Skyrim and I'm telling him he'll benefit from OCing. It's his first computer