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That depends on a) whether you value your time spent finding, ordering, and assembling parts and b) whether you value knowing exactly what's in your system. What are you getting on that store-bought system that looks cheap? I'm betting you're not getting 1GB of RAM. You probably aren't getting an actual graphics card--more likely an integrated processor on the motherboard, which will reserve some of that 512MB or RAM for its own use. Do you really need a standalone sound card? I personally don't, but if you do, you're not likely to be satisfied with what's in the lowest of low-end commercial boxes. When you say "operating system," I'm sure you already know that the copy of Windows (for this purpose get the OEM version) is likely to be more expensive than any other single component.
Bottom line, you almost certainly can't build a box for cheaper than the cheapest system you can buy. But what you can build may have some better components than what you could buy for the same price.
Head on over to arstechnica.com... they have some system component recommendations for different scenarios (budget box; gaming; ultra high-end; etc.).
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