Dell Vostro 1000, 1Gb Memory, 80Gb Hard Drive, Windows XP as standard. Delivered for ca. £270. Dell Small Business section of the website. This is a fine machine that should last for 3 years and be robust enough for Web and Word Processing. It won't be great for gaming or 3D design.
Spend the spare cash on an external hard drive for backups - preferably one that can be networked and hidden. ca. £100
Put the balance into the bank to pay for the replacement when the original gets lost/stolen/damaged.
Load it up with all the free software at the top of this forum.
PS - I sit here typing this on a Mac, but sometimes money talks and the Dell is fine for a student.