If you really want a cheap/decent CPU/Mobo bundle go for the one at Microcenter at the moment..
Buy a FX 8120 and get a Gigabyte 970 board free! So $129 for a board + CPU i think it was.
Leaves you with room for the TB hdd, good PSU and decent GFX card.
To be honest for this build you're looking at a 955BE/960T build, Intel's low end is just too slow for games (They aren't quadcores).
Anyway, using newegg..Phenom 960t
$125Gigabyte 970 board
$908GB G skills kit
$40 - Change it to whatever you want, but i can assure you, you won't get better ram, especially for the cost!Seagate Barracuda 1TB
$135 - Compare that to the price of a 500GB on cost per GB...6850 Cyclone
$177 - Best card to overclock, get a cheaper one if wanted.
As for the power supply i'd spend a bit and get something decent, see if you can get your friend to raise the budget $50 to get a better power supply, something decent.
You guys have really bad deals on newegg for power supplies.. $90 for a 500W that's only bronze certified? It's $109 here for a 600W that's bronze.. and i'm yet to see a name brand non bronze PSU..
EDIT: Also go for a used 480 or 570 at the same pricepoint, possibly snatch up some 5830's/5850's that were used for mining. Keep in mind i'd clean these out and reapply thermal paste.
Also someone beat me to the 970 + 960t combo, i'd still grab the 1TB HDD though, or 500GB if you want to save a few $$$
If you can fit in a Hyper 212+ i'd grab that too, also look for deals on a case + psu?
EDIT2: Also a GTX 460 is a better deal then the 6850. Go for it!Edited by Matt-Matt - 1/30/12 at 12:11am