I'm in the same boat as the OP's friend. Limited budget with a 939 platform (one income family of 4 now) of just under $150. I also have been shocked at the price some people have been willing to pay for some of the 1x and 2x CPU cores for 939 on ebay.
But it can be done with some patience. For under $150 I was able to upgrade the HD (640 WD HD), memory (2GB DDR400), CPU (3800X2) and GPU(9800GT, overkill but I couldn't pass up the luck on this one) to something that I'll be able to play with for the next few years. I got the first two from watching newegg for sales/rebates, craigs list for the CPU, and ebay for the GPU. I call it bleeding on the trailing edge
To boot, the CPU came with an extra 939 MB and heatsink, all for $30 on craigs list, which I also recommend looking at. I hope to get a few bucks back on these extras.
Note: I did see a few great AM2 deals, but by the time I added memory I wouldn't have been able to afford the other upgrades. Lucky, when I had money, I got a DFI Ultra-D so I hope to get some good OC millage out of the CPU as well.
I'll probably upgrade again when the current generation is in the same position as the AM2 gear is at today.