Couple of notes.
Good choice for PSU capacity... That will give some upgrade options in the future.
Fans - quiet is best when building computers for family, especially older family. The components don't look terribly hot, so if you go with 3 case fans, make sure they're dead quiet. If you must, buy a multi-fan speed controller so you can turn it up later on if he becomes addicted to gaming and gets a hot vid card, but all he really needs is a very quiet fan pushing a little bit of air over the hard drive.
On the subject of quiet, the WD Caviar Green drives are supposed to be pretty quiet too. Dunno about reliability and absolute price compared to that caviar blue though.
You couldn't find a cheaper 4GB kit for memory? You can probably get a bit more towards $50 there, and not lose much performance.
- edit - damn, ddr3 is expensive. Newegg seems to start around $73 for 2x2GB DDR3. I thought there was a memory price drop recently...
For the CD/DVD, newegg had a black friday sale on an OEM blu-ray player for $49. That deal is probably over, but you might be able to find something similar so he can play blu-ray discs. The onboard radeon 3000 is advertised as good for hi-def playback, but you might want to read some reviews to make sure.
Finally, win7 pro would be my OS choice. He won't use some of the extra features but if you want to set up automatic backups and make sure you have winXP mode available for compatibility with older apps, the pro version might be a good investment. Regardless of which version you get, I'd still go win7.
