I check Ebay several times a week in the "Desktop PC Components" section. 99.9% of it is either overpriced or priced the same as retail. But it's that .1% that i keep my eye out for. Every once in a while you can get a great deal.
Something like this system from Outpost would be a good place to start. Then throw in two 512GB PC3200 modules (value stuff), a used 9800 Pro or 6600GT and a copy of XP(legal of course) and you are good to go for your price tag.
Keep your eye on the FS forum as many are selling older systems frequently.
II'll put on together for you right here with a K8 S939 PCIe processor that will give you far better upgrade possibilities (up to an X2 4800+) for the future.
*This system with IGP will get you 1024x768 at medium details at about 40-52 average FPS and will do DX9 eye candy too. Later on i would suggest these upgrades.