CPU:
AMD Phenom II X4 Quad Core 3.5 Ghz AM3 socket $149.99
http://www.newegg.com/Product/Product.aspx?Item=N82E16819103894
Personally I prefer Intel over AMD, but AMD does seem to have the 'best bang for the buck' these days. You'll be fine with a Phenom.
Motherboard:
ASRock 4 memory slots, 2 PCIe, onboard Radeon 4250 $99.99
http://www.newegg.com/Product/Product.aspx?Item=N82E16813157243
I like the ASRock brand. I've had a lot of luck with it. Looks like a decent board but personally I'd be looking for something with no onboard video but that should be fine for you.
PSU:
630 Watt ATX PSU, 1x135mm fan with LED $49.99
http://www.newegg.com/Product/Product.aspx?Item=N82E16817152035
I'm with the other on this. Get a good brand of power supply. "No-names" in the higher wattage power supplies tend to be cheap, inconsistent, and live very short lives. I built my g/f's system from a combination deal a while back and it came with a "logisys" 600W power supply. I felt that would be just fine for her extreme gaming needs (which consists of Mafia2 and Sims3). Turns out I was wrong. She kept experiencing crashes, lockups and other abnormalities on a regular basis. I ended up installing a Corsair 500W in its place and it has been rock solid ever sense. Personally I'd have to recommend Seasonic though. I have built 6 systems now (4 with Seasonics and 2 with Corsairs that had Seasonic guts - keep in mind the new Corsair power supplies are *NOT* Seasonic now). Not one single problem out of the six.
RAM:
2GB DDR3 SDRAM $19.99 x2
http://www.newegg.com/Product/Product.aspx?Item=N82E16820231395
Why only 4GB? I think it would be hard to justify a new build these days without at least 8GB, but with that being said my own computer only has 4GB and I never even come close to needing it all.
DVD Drive:
DVD Drive $16.99
http://www.newegg.com/Product/Product.aspx?Item=N82E16827118031
I'm with you there. DVD burners are so cheap I see no need to get anything more expensive, and I especially see no need to go Bluray on a computer unless it's being used as a HTPC.
Hard Drive:
500GB 7200RPM Seagate HD $39.99
http://www.newegg.com/Product/Product.aspx?Item=N82E16822148701
I'm a WD guy personally but I really don't think there's not much of a difference these days. Unless you like to download music or movies, 500GB should be plenty. Don't let people talk you into a SSD. Sure it's a lot faster and can boot Windows in a matter of a couple seconds but in the whole scheme of things it really helps little to improve your computing experience. Maybe when the price comes down low enough to compete with normal hard drives I'd consider it but I can't justify the cost just yet. I did splurge on a Velociraptor a couple of years ago and yes it's considerably faster than normal hard drives but not enough to make a huge impact on performance. Personally I wish I had put that money into a better video card instead.
for a case, I'm trying to decide between the following two:
Raidmax Tornado Blue $39.99
http://www.newegg.com/Product/Product.aspx?Item=N82E16811156223
Xion AXP 100 $49.99
http://www.newegg.com/Product/Product.aspx?Item=N82E16811208027
I really don't think the case matters that much. I got lucky and found a heck of a deal on a NZXT case... This one actually:
http://www.newegg.com/Product/Product.aspx?Item=N82E16811146059&cm_re=nzxt-_-11-146-059-_-Product and I got it on clearance for $30 with free shipping! It replaced an el-cheapo case and I really like it! I love how it has a couple of small blue lights in the front but the whole thing isn't too flashy. It has all kinds of room and a bottom mounted power supply.
I spent another $20 in fans for 2 140mm fans on top and one 120mm fan on the side which give me plenty of airflow! Also the big fans are MUCH quieter than the small ones because they don't have to spin as fast to move the same air. This results in a very quiet system.
The only drawback to this specific case is the front screens get dirty real easy (I keep it near the floor) but a quick pass with the handheld vacuum attachment cleans it all up real fast so maybe it's not such a drawback afterall! At least the crap is getting caught in the screens and not inside the case!
Yes you're definitely going to need a video card. I would recommend AT LEAST a 5770 video card. I would recommend you go with a less expensive processor and a 5770 INSTEAD of the processor you have listed and the onboard video (if you had to choose). I built a budget gaming system for a squaddie using the AMD Regor processor
http://www.newegg.com/Product/Product.aspx?Item=N82E16819103903, a 5770 video card, a cheapo motherboard and case, a seasonic power supply, DVD burner, 4GB of ram and even a decent headset for under $500. He's extremely happy and has to try REALLY HARD to see any less than 60FPS in aces high... and this is with all settings maxed!