If you want anything competitive to Winblows, then try Linux on the Efika. You'll have plenty of software like Open Office and Firefox so you can do almost anything that you can do with Windows as well.
And the costs? Well, the Efika is 200 dollars, add to that a PSU, a harddrive and some bits and bobs like a mini-ITX case, a keyboard and mouse and a nice TFT screen.
I guess that for 500-600 dollars you'll have a nice system.
@kidkoala: DDR-Ram will not help much, since there's no place to add it :-D (the RAM is soldered on the board)
EDIT: oh yeah, an AGP video card might come in handy too :lol:
