All from newegg and estimated prices based on what I just got (except memory from crucial)
Athlon XP 1600+ retail - $142
Epox 8KHA+ - $98
Enermax FS710b with 330w ps - $99
Maxtor 40gig D740x - $83
SB Audigy oem - $62
256meg pc 2100 ddr - $67 (search for Anandtech 15% discount in hot deals)
Linksys NIC -$10 - $20 (already had one)
Lite-on Black 24x cdrw - $80
Lite-on 16x DVD -$60
Any geforce3 ti200 - $160
Natural Keyboard - $18
Intellimouse optical -$24
This comes out to almost $1000 without monitor if you add in shipping. Based on what he wants or needs you can adjust from there. Instead of a geforce 3 get a geforce 2 ti for $50 less. Keep the hard drive, that's a great deal. If he doesn't need a cdrw drop that. You can get a fast duron and a good motherboard and shave another $50 off the processor price. You could get a lesser case and save another $20. It's all up to what he needs. You should put those requirements in. If he's not going to burn cd's you'll have another $80 right there.
You could also try
Athlon XP 1600+ retail $142
MSI K7N420Pro $152
512 megs Crucial pc 2100 (2x256) $135
Maxtor D740x 40gig $83
Antec SX830 300w Antec ps $79
Liteon 16x DVD $60
Natural Keyboard and Intellimouse optical $42
That's about $700 or $740 shipped, maybe less. With this he can deal with geforce2 mx video onboard the nforce until he gets more money and can upgrade to a geforce 4 or whtaever is out. I don't know what kind of monitor to get, but again you could get a lower end case and shave off $20, drop down to a tbird processor or duron for up to $50 or $60 less, get 256 megs of pc2100 (2x128) instead and shave $75 off. It's all up to your friend. You also didn't say how big of a monitor he wants.