As for GPU hard to say. A DX10 or DX11 card, with performance around that of a Geforce 8800 GT or 9800 GT (or AMD equivalent) see
http://www.emsai.net/reviews/gpu/ for comparisons (some of the later releases haven't been added yet) cards in that range should be pretty cheap, you can probably get a nicely used one almost thrown at you too.
The CPU seems ok enough, these days dual core should be the minimum, 3 or 4 core is a better choice but dual core is good enough.
As to ram, 600 vs 800 mhz is hardly any difference, esp. considering the MB and CPU etc.
When it comes to ram, more ram is better than more speed. (the ram can be insanely fast, but that helps nothing if you keep running out and have to swap to HD all the time which is very slow.)
So I say go for 2GB if you are running a x86 OS and 4GB if you are running a x64 OS.
PS! You really need a sing and fan for the CPU as AMD tend to get a bit hotter than Intel. And the PSU, it might work out ok.
Depending on supply you may have to look around and ignore the speed. You may also save a few bucks on a "ram kit"
Dual Channel ram setup gains you more performance than higher ram speed does as well.
More ram means less reliance on swapfile/HD caching, and te OS can keep stuff laying in ram longer before having to swap it out.
Also proper Dual Channel setup. (usually not a issue with MB's with only two ram slot, but those with 3 or 4 slots may need the sticks in certain slts to use Dual Channel)
the sticks need to be matching pairs.
The benefit of Dual channel and multi core is that each core can access a stick (ram module) asynchronously. (make sure the MB/bios actually support this though, if it doesn't you can just throw any matching speed ram in there, heck with AMD at least you can even have non-matching speed ram in that case).
So you should be able to get a decent "budget" PC that can run all current games (not with all features maxed obviously, but at least looking ok and playable)
And Windows 7 instead of Vista should be obvious as Win7 have at least similar performance to XP. And Win7 (and Vista with a update) let you use DX11 even with DX10 or DX10.1 hardware.
On my system (8800GT, 3 core AMD, 4GB (2x2) dual channel 667 (I think) ram and win7 x64) around half the ram is filled all the time and it's rather constant so the Win7 caching is doing a great job,
some of it is actually file caching, so many times the second time I run a program or access a file it's almost instant.
And since I got 4GB and x64 and only around half i used this means a x86 program almost always have up to 2GB of ram available at any time, so I rarely notice any swap file use during regular program use (except Windows swapping out parts of idle programs that's been idle for a very long time etc.)
In most modern games my system probably is auto configured to 50% all features by default (or around there) a little manual tweaking of settings I can get quality up 75%+ with acceptable framerates on my 1920x1080. Sometimes this means I can't use 2x or 4x antialising but at that high a resolution any jaggies is hardly that noticeable anyway, most other settings like AF is maxed, and shadows and effects are either maxed or at 75% of max etc.
