I still maintain a Pentium 133MHz and a Pentium II 333MHz for gaming purposes, and I do think the VGX XL's are cool. I just don't think they're a good idea for someone who will probably want to do video editing. That said, I completely forgot the biggest cash drainer when building a PC: a Windows licence. I was configuring a system within your budget and as doing fairly well with an mATX AMD-based setup until I remembered Windows.
You can get an OEM version that will be cheaper than a retail version, but it gets tied to your hardware so you may find difficulty with activation if you upgrade your core hardware. I haven't used an OEM version since I had XP, because it only allowed 10 activations, and over 5 years I used them all up and it wanted me to buy a new licence. I then went with the more expensive retail package of Windows 7 Pro, and I can activate as much as I want and change my hardware as much as I want, I just need to call Microsoft's automated activation line and type in a code after I've reinstalled.
Of course, if you're a linux user, all I just said is redundant. ;)