Only problem I see is hard drive space. More storage is never a bad thing. With only a 40 gig drive, if she needs more you'll either have to migrate to a new drive or attempt to teach her how to use the D: drive which will probably just confuse and irritate her. You'd have been better off going with a 200 gig drive (seagates are quiet) and being done with it. You mentioned she uses her digital camera and if she gets into making albums or expands her camera use at all, or even just upgrades to a higher resolution camera in the future, you'll fill that drive up really quickly.
On that note, a DVD burner would let her archive the photos in big batches instead of one cd at a time, but then again it's easy to put one "album" per cd and organize it that way so a cd burner isn't really a bad choice.
The mobo has built in graphics so you probably didn't need a separate video card.
Other than that, nothing jumps out as being bad. I'd personally always buy a "real" cpu instead of the value ones like the celeron and sempron since the price difference is typically only $30 or so, but if you're going for absolute cheapest then $30 here and there really adds up.
If you need a display, get a 17" LCD. They're getting cheaper and take up tons less desk space.
For the OS, you would be fine just getting winXP home OEM for $80 or whatever. You usually need to get it with hardware though...
