This is the computer I built to play Everquest 2 last week. It was a serious upgrade from my old Pentium 2. I bought all the parts on Newegg and everything runs great.
AMD Athlon64 +3500
Epox Nforce3 Motherboard
1GB Corsair Value Select Dual Channel RAM
Sapphire 128MB ATI Radeon Pro Video Card
Audigy 2 sound card (the cheapest one)
DVD/CDRW Drive
CoolerMaster 480W Powersupply
Floppy
Computer total was about $1100
Added a 19" Viewsonic Monitor +$200
Windows XP Home Edition +$200
California Sales Tax (7.5%) +$100
Shipping +$70
So if you have a good monitor, a copy of Windows, and you don't live in California, you can get a really good computer for about $1200.00 that will play the game beautifully.
Keep in mind, with lag, it's not always your computer. In addition to latency caused by being in different areas of the game, make sure you have a good ISP. I personally refuse to use anything less than Cable for my online gaming, but DSL was good when I had it (though not as fast).
I keep my settings a little lower than they have to be (no significantly noticeable difference) and I have yet to experience a single bit of lag in the week that I've been playing. Default is High Performace with some settings tweaked, like the draw distance (I want to see the mobs coming). I haven't even tried it on Balanced, simply because I live by the philosophy, if it ain't broke, don't fix it and the game looks just fine the way it is now.
Good luck with the build and remember to take your time. The hardest part was making sure everything was plugged in correctly and figuring out which pins were ground. Read all the manuals!
Xczaria - Teirdal - Crusader - Neriak Server
(Always looking for a good group, especially one interested in doing the Betrayal Quest)