Since you've already gotten loads of great advice on this machine, I'm not going to go into what I'd recommend part, by part for every component in the system. Looks like you're already covered in spades there.
A few points I do want to mention about a few of the parts, however, based on my own experiences with machine builds:
1.) I don't recommend scrimping on PSUs either. Get a reputable brand, but yeah, you don't need a 1 avacadot thermonuclear reactor here (as I'm willing to bet you already know, if you do builds). Go a bit lower wattage for a build like this, and stay with someone reputable (my personal favorite for builds in this range is SeaSonic PSUs).
2.) Somebody mentioned RAID 0 above - I can't imagine why this type of build would ever need striping. If data-loss is a critical concern, then mirroring maybe, but they shouldn't need striping for what you've described. Installing a raid setup, with the raid-driver setup issues with XP can be its own headache, and so can walking the user through disk management issues -- and those are headaches they'll more than likely dump in your lap the first time they get confused, or anything goes wrong. For this type of build, my vote is avoid raid like the plague. The newer Seagate 7200.11 SATA 3 'Cuda drives with the second generation of their perpendicular recording technology are very fast, and a half terabyte will only set you back about one Franklin. That should be more than adequate. Hell, a simple, yet solid 7200 RPM WD vanilla drive would probably work just as well here too.
3.) You mentioned light Photoshopping. I'm with Bald, Fulmar, and Dragon - go 2 GB for your system RAM, no less. Just be sure to grab a Mobo with 4 ram slots and start her off with 2 X 1 GB sticks. That way, if 'light Photoshopping' turns into 'heavy Photoshopping', she has an upgrade path that's as cheep and simple as possible. She can just grab a couple more half gig sticks and she's right up to 3 GB - easy peasy.
4.) If you expect that you'll be the guy fixing this machine if she breaks it (and they *always* seem to do something to break our pretty machines in record time, don't they?) I'd say don't worry as much about which case you think she might find aesthetically pleasing , and worry more about what will be the easiest for you to crack open and work with over the months/years. Personally, I've made it a habit of going for case designs that permit quick and easy access to their interiors without the need for screwdrivers, etc., (though if the person has nosy kids, you may want to re-think this one) and cases that have the same easy access to drive bays so that I can quickly slap in a new drive when they need more HD space, etc., etc. Other than that, my only other real issue with cases is whether they do the little things - like roll the metal's edges over so you don't sever an artery in your finger when you try to connect a SATA cable, or blow a lint bunny out of your CPU's fan.
Again, since you're a fellow builder, you probably know a lot of this already - I just wanted to chime in with everyone else, since you were soliciting suggestions and I'm killing time.
Good luck with the build!
-Caz1
