Here's a suggested system to suit your budget. The mobo has onboard AC97 audio, which is fine but you can disable it and I've included a soundcard in the list. I sourced all this stuff from
www.ebuyer.com. I'm not suggesting you follow the list rigidly, but it's a guide. For another £60.00 or so you could use an Athlon XP CPU. All prices listed exclude VAT but it's been added at the end of the list.
ECSK7S5A Motherboard, 133 FSB, DDR/SDR RAM, on board audio - £41.78
Duron 1Ghz CPU - £38.35
Coolermaster DP5 7H53F CPU Cooler - £5.74
Nokia Style ATX Midi Tower Case, 300W PSU - £18.06
Philips 107E 17" Monitor - £99.46
128MB DDR PC2100 RAM - £36.75
IBM Deskstar 40Gb 7200 Hard Disk - £65.07
Prolink Geoforce Ti 64MB DDR TV Out Vid card - £67.14
Sound Blaster PCI 128 Sound Card - £12.53
Logitech Internet Navigator Keyboard - £18.94
Logitech 3 button Mouse - £8.51
PCI 56K Internal Hardware Modem - £7.90
Net: £420.23
VAT: £73.54
Total: £493.77
Oops, forgot a CD ROM drive and a floppy disk drive. Add about £25.00 for a CD ROM drive and £8.00 for a floppy drive = £33.00 +
Total: £526.77
OK, that's a little over £500.00, but there are areas you could save on. You could go for a 15" Monitor instead of a 17"; SDR RAM instead of DDR; not use a sound card, use the onboard sound; get a cheaper keyboard & mouse; a lower specced video card, etc, etc.
Anyway, for £500.00 worth of parts and putting the thing together, I'd probably charge about £650.00 (no, I don't do it for a living).
As I said, not written in stone but I hope it gives you some ideas.
Good luck!