For reference, I picked up a Compaq M700, 550MHz P3, 256MB RAM, 12GB HD and DVD drive for $550 about 3 years ago. Admittedly that was at auction and during the peak of the dotBust era when there was a lot of stuff being auctioned in Boston (ie buyers market).

For the intended use you've described, 10GB HD and 128MB of RAM should be ok. I'd prefer to see 256MB of RAM and 20GB of disk space though. What OS are you intending to run on it?