With that budget, why not go Socket 939 with PCIe? I'd do something like this:
Case -
Chenbro Xpider. This one has a horrid orange color, but it's only $19! Excellent build quality and cooling with 120mm fans. No performance mods needed here.
Fans - There are a zillion fans out there, but I'd forget Vantec for sure. Panaflo and Yate Loon are good bets and provide plenty of airflow.
Mobo - Most of the major NF4 boards should be pretty good. DFI's NF4 Ultra-D is the hot pick for gamers/OCers these days and costs about $140.
CPU - Get the
Venice 3000+ for only $8 more than the chip you listed.
HSF -
XP-90 at $25. Killer performance at this price.
Vidcard - The 6600GT and 6800 are both great cards for the money. ATI makes great cards, but Nvidia owns the $150-200 niche right now.
Your other components look fine, though you might prefer a SATA HD. Don't forget an optical drive; there are plenty of good DL DVD burners for ~$60. You also might hold off on the Audigy - your friend might find onboard sound okay for his needs. Either way, you should have no problem building an excellent system for right around $1000.