You can do better than an XP 1700+ for $700. There was a similar question asked a couple of weeks ago and there were a couple of good answers, there for a Pentium setup and and AMD Barton 2500+ (my suggestion). Search the boards under the title "mid-range computer". Here's a copy and paste of what I put in there (prices are from NewEgg):
Motherboard: Epox 8RDA+ - $82.00
Processor: AMD Athlon XP 2500+ Barton - $86.00
CPU Cooler: Speeze CPU Fan Model 5F263B1M3 for AMD - $12.00
Memory: 2 x Geil DDR RAM 256MB PC-3200 400Hz Ultra - $100
HDD: Western Digital "Special Edition" 80GB 7200RPM 8MB Cace - $80.00
Video Card: Abit Siluro GeForce4 TI4200-8X 64MB TV/DVI - $89.00
Case: Raidmax Model 208 10 Bay 350W PS - $43.00
CDRW/DVD-ROM: Lite On 48x24x48x16 CDROM/CDRW/DVD Combo Drive LTC-48161H - $68.00
Floppy: Teac 1.44 Floppy Drive - $12.00
KB/M: Logitech Optical Desktop KB/M - 28.00
Speakers: Altec Lansing AVS300W Multimedia OEM - $30.00
OS: Windows XP Pro OEM - $148.00
Grand Total with shipping - $778.00
You'll be able to overclock this system to more than 2GHz (XP 3000+ level), not to mention the overclockability of the video card. Although you'll probably not need to in order to play any of games you would like. Drop the keyboard and the speakers and you're just about at $700. If you have your OS already, then you'll be coming in at around $550. Feel free to get the ATI 9x00 Pro video card instead of the Ti4200 with the difference.
-Brett