just as a note: your current recorder is digital... unless it has two big reels of tape on it...
I built my PC for less than $200. But I also had access to some cheap parts from the IT department at work. Stuff like video cards, cdroms, floppy drives and cables and shit.
Also you're going to have to budget for the software you're going to use. The major players are Cubase and Sonar. And don't forget the sound card. And the MIDI interface. Its a lot of choices out there, but you can find combo interfaces that got audio and MIDI inputs and outputs, and come with software that you can record with (like the MBox 2). And then you'll need a mic preamp, a good mic, and a good room to record in.
Then there's plugins. You will want some good software EQs and compressors and other effects.
And once you get the computer, you'll discover that there's a world of software available, and then you'll get addicted to surfin the internet to find neat little software that does this or that, and your productivity will go down the drain. LOL
Good luck!
By the way, look out for websites like dealnews.com. They go around the internet and find the lowest prices on computers and parts and shit.
Newegg.com always has nice prices too.