^^Sounds like a good PC at a reasonable price.

Now that I see where you are going a bit better, allow me to make a few suggestions......

PSU: 600W is overkill for powering this rig, unless you plan on significant future upgrades I would scale it down to about 450-500W.

Case: Case seems a bit overkill for the situation, but if you like nice cases this qualifies.

Hard Drive: Hard drives are pretty cheap now days and when you get an 80GB drive you can spend very little ($7 in this case) to double your capacity. I think its very worthwhile but if the 80GB is overkill for her already it might not be.

Memory: This is a similar situation to the hard drives, but not nearly to the same extent. If you look at the link I originally provided for memory you were getting 2GB for $55 if you handled the mail in rebate. It may or may not be worth the extra $20 to double the memory depending on if she uses memory intensive applications or not.

Normally I would push the 5200+ a bit more for a gaming machine but considering the goal of this machine I think you should be fine with the 4600+.

In any case I think the Hard Drive and Power Supply suggestions are very sound advice for all situations, but the Case and Memory is more preference and personal need. Whatever you decide, it will be a decent machine for the price considering the need to purchase monitor and OS as well.

Guys with my setup (above) Vista or XP? 64-bit edition or no?

First of all if you go XP then absolutely do not go 64 bit edition.

I would also shy away from 64 bit for now just for the simple fact that software support is horrid still. Its going to take a while at the current rate for that to change too.

As for Vista or XP this seems to be preference driven but I hear far more fuss from Vista users than XP users. I'm sure in part due to XP being more well known, but what does that matter when you are trying to do a project and it needs to be done NOW!

So ya I would go with XP, but I am sure others would say Vista.

Stay away from OKIA power supplies, seriously. There 12v line is very bad most of the time.

Also, I would change that GeForce 8400 for anything DirectX9 from last lines. Say GeForce 7600 or Radeon X1600. I'm pretty sure you can find a X1600 for that price.

Yea, I just discovered what XP stands for (Xtra Power). So im going with that lol. Ill wait for the DX 10.1 card ie 9800GTX. 

 According to benchmarks the 8400 is better then the x2400HD so no thanks to anything weaker and the 7600 was actually $20 more same with the 8500.

For the power supply that powersupply is pretty highly rated by NewEgg users.