What about operating system cost and all the other software?

The only software you should ever have to pay for is the OS and games. You can get Vista for $99 from Newegg which includes a free upgrade to Windows 7. I recently built a CrossFire/QuadCore rig via Newegg for $1800, which included absolutely everything including an HD monitor and would have cost hundreds more from a retailer.

TL/DR, software costs are a non-issue, OS is sometimes an issue, but not too expensive.

OS cost is typically about $99-$199(OEM basic or "premium" versions, respectively), though it's sometimes possible to use a version from a preexisting computer/build. This depends on who you bought your old computer from. Smaller stores and custom boutique places tend to use OEM versions of windows that'll install just fine into any working rig you can build. Larger places like Dell use branded disks that'll check your hardware for the companies proprietary BIOS, and refuse to install if they don't find it(this can be bypassed, but it's not always easy, or technically legal depending on local laws). Other software costs are only relevant if your old software doesn't work on your new machine/OS AND there's no free alternative, which for the average home user/gamer is rarely an issue(they're either using the free stuff in the first place, or the software bundles from the old computer install on the new rig without issue, or the old computer still works and can be used to run the old software).

And why am I assuming that there's older software/hardware/copies of the OS laying around? Because people who assemble their own machines tend to do so *after* they've bought a prebuilt system they've tinkered with, fixed or upgraded and found that it's not as hard or scary as some people seem to think it is.

Well, you could say I put off OS costs for now. I was going to use the XP license from my old machine, but decided to go with the Windows 7 RC. Works great and I don't have to worry about picking up a license until March.

re: "what about the OS"

If you're upgrading from an existing machine, you can use your same copy/license number. In fact, if you're using the same hard drive, sometimes you don't even have to reinstall the OS. It'll recognize the new components on start up, at least enough for you to install whatever updated drivers you need.

I'll often leave the hard drive in and let it recognize stuff at least the first time I turn on a new Motherboard, even though I know I'm going to do a fresh install later. It lets me take a few days off of messing with it, and games like WoW will generally play just fine in the meantime :D. Additionally, it gives me a kind of dry run where I can decide which of the accompanying software I want to install and which is just advertware.