If you're starting completely from scratch, with no other spare parts sitting around, it might be most cost effective to just buy a used rig off of eBay. I'd imagine something like a Pentium II or III, around 500 mhz with 256 megs of RAM (maybe 512) will suit your needs. I took a glance on eBay, and you should be able to find something for well under $100. After that, you might want to invest in a better soundcard, depending on how you want to hook it up to your stereo.
And if you think the OS is the biggest cost concern, this might be a good time to mess around with Linux.
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