For a cheap, but still good loop if you go with used parts you can make out for about 200-250.
Don't buy a kit, never as good quality as when you build it custom.
Watercooling basically allows for dissipation of heat carried by water through tubes which eventually lead to a radiator which cools the water, only to cycle through again and again.
Basic parts you need are: pump, reservoir, radiator, fans, waterblock, tubing, fittings.
I know a few of the members have a cookie cutter layout of a few options for budget loops, i'll see if I can find it somewhere but in the meantime you can look over this section at other peoples builds and check out sites like:
sidewindercomputers.com
jab-tech.com
petrastechshop.com