Alright, this should be a fairly simple task...
First off, you need to ask you M-I-L what exactly she needs to use this computer for, etc., because that might impact the PC's configuration.
I'll go with a good and capable system here though, that will come in way below her budget.
1. Case: Antec SX830 (with 300W PSU)
2. Motherboard: ECS K7S5A (has built-in sound and NIC, which is a good thing...she won't need any better sound than what's onboard)
3. AMD AThlon XP 1600+ CPU (retail with heatsink)
4. 256MB Crucial PC2100 DDR SDRAM
5. Visiontek Xtasy 5632 GF2 GTS video card
6. 40GB Maxtor hard drive (7200RPM / ATA133)
7. LiteOn 24/10/40 CDRW Drive
8. Floppy Drive
According to my calculations, this configuration comes out to $610.44 shipped. These prices are all in-store prices, not pricewatch, and they are for brand new items, not refurbs or used. No rebates are reflected in the price.
Now, this is a very solid configuration and it leaves a lot of room to work with.
I assume that she doesn't need anything more than a 19" monitor. If that's the case, Dell sells a whole bunch of them and they offer free shipping and plenty of promotions. For example, you can get a nice Samsung 950x (not sure of the model) for less than $200 shipped. That's a nice and large enough monitor for little money.
As for the printer, you actually might want to recommend the small Brother laser printer if she only needs B&W prints. That one is good, and deals on it have been floating around the HOT DEALS section for a long time. If she needs color, any Epson Stylus Color printer will do really.
Good luck.