Ok, here's my opinion.
That looks like a very good system for just doing general things there is however a couple of things that I would personally do differently.
The first is the Power Supply, I seriously suggest spending a little more on a power supply and getting something decent as if you buy decent the first time chances are it's going to be safe and you won't have to buy again, I would go for this
Coolermaster Power supply it's not too expensive and it is a very good power supply, If you cannot stretch to this I recommend getting a slightly cheaper case to make it fit the budget.
The second is the
RAM, what you have gone for is fine but I would personally go for something a little faster such as this
OZC 2GB Kit.
Another thing is why do you need to spend £34 on a
CPU cooler when the cooler included with the
CPU is more than adequate for this use and you will probably get a couple of 80/120mm fans included with the case, save the money and put it towards
RAM/
PSU.
The thermal grease I would go for something such as
OCZ Ultra 5+ which is rebranded Arctic Silver 5, this is optional and purely a 'tried and true' for me.
The last thing I will say is graphics card is your choice, remember if you run anything even slightly graphically intense with onboard graphics it will take it's toll as it uses
RAM and
cpu cycles to render anything graphical, I personally would go with a CHEAP graphics card, doesn't matter what it is it will be better than on board and take the load off the system, especially if you plan to run vista.
OEM in this context means you will get the part advertised and nothing more, in the case of your hard drive it means you will get the drive only, no cables/manuals etc.