I'm a hardware nut, and have put a couple of computers together, well you're not a gamer! :^)) Best place to purchase, almost anything for your system is New Egg.
New Egg
AMD is the best way to go on a budget, but if you watch the Egg for a sale you can get a Athlon for about the price of a Sempron, (Semprons and Celrons are crippled versions of the Athlon and Pentium lines) a slower Athlon is better than a faster Sempron. Now if all you do with your computer is type letters home to Mom and surf the web, what a lot of people do with their computers, a Semprons fine. However, even a dual-core Sempron will seem fast compared to the old K6!!!
You can probably pick up a 450 or 500 watt PS, at a computer show for $10 or so, but in all honesty, unless you plan on putting in some power hungry add-on cards you can always get by with a 250 or 300 watt PS. (then again for $10 get all you can!)
WinXP, any version, is all I recommend or use myself! If you ever have a question, just ask!