Ebay is the place to go. I got a brand-new IBM Thinkpad R31, with XP Pro, for £499 delivered. I've been delighted with it.
Of course, I then had to buy a little optical mouse, a USB hublet, a case to keep it in, a USB keyboard, an IR-link portable printer, a bluetooth dongle to talk to my cellphone, a WiFi card ...
I've compared what I got with my local PC-World and others, and I reckon I would have paid about £300 more there for the same spec.