Seems like a decent bargain, although it is a system geared heavily towards a server application. If you want a server for your LAN/Website/domain, this would probably be a good choice if you don't mind the sluggish performance. For your average user, you could build a faster rig for under $200 easily.
If cost is all you are after for your sis/bro-in-law, you could look at getting a VIA board (integrated proc, video, lan, etc.). Those boards run $100-$150 depending on speed, and all you have to buy is some cheap PC133 RAM (crazy cheap right now) and a case/HDD/FDD/CD. These boards take almost no power, so you could get a bargain-basement case with a crappy power supply and it would be no problem. Total cost for that a VIA based system running @ 1GHz would be around $200-$250, depending on spare parts you have laying around, etc.
I would take a newly-built system over a refurb any day (even if it is Grade "A")... thats just my 2¢.