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The good news is your requirements are fairly mundane, so you'll do fine with a cheaper system! I would recommend going to a Mom & Pop local computer shop that builds to suit. Usually they offer bundled packages so just pick one somewhere in the middle.
AMD chips are cheaper and just as good. Get at least 3GHz. Just get whatever motherboard they recommend. MBs usually have video card, sound card and network cards hardwired nowadays. The built-ins should be fine for your needs. The MSI motherboard I got has a new PCIExpress slot, which will be the new standard for video cards. Make sure you have this type of slot if you ever plan to upgrade video. RAM is cheap so pay for the extra half gig so you have a total of one gig. DVD burners are cheap so you make sure you get one. Make sure it supports DL (double layered). You'll be fine with the standard hard drive which will probably have 80GB.
I prefer XP Pro to Home edition, but I've never worked on Home. My understanding is it has more wizards for setting things up, but its harder to turn off the unwanted stuff.
This setup should cost only about $600 so you have lots left over to splurge on a nice flat screen display!
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