Best/Fastest Reliable system for £800 ?

Hi,

I have always used laptops due to the portability issue. However, I cannot get the kind of spec laptop for my available money (XPS M1710 with T7600G). Because of this I'm considering a Desktop machine. I'm completely new to system building and overclocking, but am looking to build the best/fastest/most reliable system possible for £800.

The system will mainly be used for software development (VC++ 2005, VMWare), audio/video encoding (MP3, OGG Vorbis, XviD, H.264), and general web browsing/office tasks, although I may use it for the occassional game of Chess or flight sim (eg. IL-2 1946, Falcon 4: Allied Force, Chessmaster, Fritz).

I guess overclocking is the best route to go, although need guidance on the amount of overclocking, bearing in mind I want the machine to be reliable and last a few years, as well as being fast.

Summary of usage:

- Software development/testing (requirements: fast compilation, capable of multiple virtual machines)
- Audio/Video encoding (MP3, OGG Vorbis, XviD, H.264)
- Occasional game (eg. IL-2 1946, Falcon 4: Allied Force, Chessmaster, Fritz)

Required Specs:

- Core 2 Duo processor
- At least 2GB RAM, although would prefer 4GB RAM (Does RAM work at DDR if you have 4x512MB or 4x1GB, or is that only the case with 2x1GB and 2x2GB ?)
- 20"+ WUXGA (1920x1200)

After limited research I am considering the following components:

- Intel Core 2 Duo E6300 (due to E4300 having hardware virtualization disabled - Is this a big deal when running VM's ?)
- Tuniq Tower 120 or Arctic Cooling Freezer 7 Pro or Arctic Cooling Freezer 64 Pro
- NEC AD-7173A DVD R/RW/RAM Writer
- Lite-On or LG DVD R/RW/RAM Writer
- Windows XP Pro 32-bit or Windows XP Pro x64 or Vista x64 ?


I am not really sure what other components would be best:

- Graphics card
- Motherboard
- Case
- Power supply
- Hard drive
- Keyboard + Mouse
- Speakers

Anything else I may have forgotten ?

Questions
---------

- When overclocking, is the CPU/GPU the only components that are likely to get fried, or others at risk (eg. Motherboard) ?
- How to connect to TV so I can view content on PC (TV only has SCART and COAX inputs) ?


Any advice (including complete parts list, along with why each one is best, if poss) would be greatly appreciated ?

Just out of interest, I was considering the DELL E520 Core 2 Duo E4300, 1GB RAM, 22" 1680x1050, 160GB HD, 16x DVD+/-RW, system, Intel GMA3000 graphics, which costs around £420-£440. Any thoughts on this system and future upgrade potential ?