Gordon,
With £750 to spend, you should be able to get a very nice PC that will keep you going for several years. If you (or others that use this PC) don't do any 3-D gaming, then there's no need to get a high end graphics card. This will keep costs down in that area, freeing up cash to spend on processor/HDD/memory which are the important elements for photo processing.
XP Pro SP2 is a wise choice, though having just started using Vista, there's fixes available for all the niggling problems I found I had. You may find that a new machine comes bundled with Vista now, though you should be able to specify that you want XP instead.
As for £250 for a decent screen, it depends on your definition of decent. See my review of the Viewsonic VP930 flat panel,
http://www.worldphotographyforum.com...ead.php?t=2452
this was £200 and isn't really up to CRT standards for photo editing. If it's going to be your main screen, I'd spend a bit more than £250, or even better, keep your CRT if you are happy with it.