Thanks for all the replies. I've been looking at a place called Georgia Computer Workshop to build this machine. I've never owned a computer anywhere near a gaming rig, I'm using a 6 year old Dell Dimension that I bought off the shelf on eBay. I'm not a techie by any stretch and am trying to research as I go, but it can be daunting. Here is what I came up with on their configurator in my budget and using the choices they gave on the configurator. Prices are USD.
Wow, nice rig. If you've followed this thread, you'll notice that the rig matters less than the OS and how well you tweak it. TS2010 runs pretty well on a minimum-to-below-spec machine. If your goal is just to run Trainz and do other things like DVD video editing, you can do well and spend lots less. If you're gonna do HD editing and play FSX, or want to future-proof your system so you can play Trainz 2014, perhaps, then you might (or might not) do better to get a higher-end rig.
Let's keep it simple: Start with your OS. XP is lean and mean, especially when properly tweaked. W7 is a vast improvement over Vista, but that's relative - it's still a resource-intensive OS. If you have software that NEEDS W7 then, logically, you should go for it (or, at least, set up a dual-boot machine with XP.) Absent that, hold off and stick with what works.
I see an awful lot of people running high-end machines in part because the OS itself is such a resource hog.
TS2010 can benefit somewhat from 64-bit extensions, so if you don't mind buying a new OS, XP 64 may help. However, the XP that probably came with your old Dimension is tied to Dell BIOS, so you can't reuse it. Therefore, absent additional info, you're probably going to be at a crossroads - stick with what works well, or gamble on the new guy. I should point out that W7 Home does not have an XP compatibility mode, which might be an issue.
You indicated you want to run a flight sim, but which one? FS2004 runs awesome under a very low-spec machine. FSX, on the other hand, needs a hot processor. As an aviation freak and a currently-inactive commercial pilot, I'm not impressed enough with FSX to consider spending the extra money for the hardware you'd need to run FSX acceptably. Remember that's a personal opinion; if you really like it, go for it.
Couple questions though:
Why a separate NIC card? That mobo has a NIC built in.
A lot of people say a separate sound card is nice, but, personally, on-board audio is good enough, especially for something like Trainz.
I do consider a 500w PSU to be WAY underpowered. GPUs can load a PSU considerably, let alone the CPU, drives, etc. I have seen too many systems fail because of a weak PSU. I think a 250 requires about a minimum 18A or 20A +12VDC rail (I know the 220 needs at least 18A) so go above the minimum specs as far as your PSU is concerned.
I dislike ASUS intensely, as I've gotten screwed on some of their products. YMMV. I do recommend, if you have not done so already, checking out their
QVL or compatibility charts for CPU and memory compatibility.
Finally, a word of advice: Don't buy OEM products, especially hard drives. Get retail boxed. Just trust me on this.