Maximum PC

Here's the setup I'm thinking of going with

http://pcpartpicker.com/p/68Un

Obviously it's a budget gaming rig. What I want out of it would be medium settings for Bioshock 1 with minimum lag. Nothing that fancy. What do you guys think?

Buying a pre-built desktop at your range would be better.
Newegg iBUYPOWER Desktop $504.99 with free shipping.

Part list permalink / Part price breakdown by merchant / Benchmarks

CPU: AMD Athlon II X3 450 3.2GHz Triple-Core Processor ($72.99 @ SuperBiiz)
Motherboard: ASRock 970 Extreme3 ATX AM3+ Motherboard ($84.99 @ Amazon)
Memory: G.Skill Ripjaws Series 4GB (2 x 2GB) DDR3-1600 Memory ($27.98 @ NCIX US)
Hard Drive: Samsung Spinpoint F3 500GB 3.5" 7200RPM Internal Hard Drive ($60.99 @ Amazon)
Video Card: XFX Radeon HD 6770 1GB Video Card ($99.99 @ Microcenter)
Case: Cooler Master Elite 360 ATX Mini Tower Case ($38.86 @ NCIX US)
Power Supply: Antec 450W ATX12V Power Supply ($35.98 @ Newegg)
Optical Drive: LG GH24NS70 OEM DVD/CD Writer ($17.98 @ Newegg)
Monitor: Acer G205HVbd 20.0" Monitor ($89.99 @ Newegg)
Operating System: Microsoft Windows 7 Home Premium SP1 (64-bit) ($99.99 @ Newegg)
Total: $629.74
(Prices include shipping and discounts when available.)
(Generated 2012-04-04 21:44 EDT-0400)

If you are set on building this is what I would do. You would have a really decent low budget setup that could handle about anything you throw at it and would give you a upgrade to a FX chip later.

I would not go any lower than the 6770 on video card and I would grab a Cooler Master Hyper when you get the extra rupies. If you can scrounge a few more bucks Id go with a 6850 too.

You can get a ton of value when you go OEM because you are getting the OS for practically free when you buy them. Id hate to see you go that route because building is such a good learning experience and its addictive and fun! Do you have any ways to get Windows at a discount? (IE Student or MSDN maybe) Freeing up 100 dollars would let us take your build a long way.

Good luck and let us know what you decide to do!