Note that XP does not come included in the base price, nor does a hard drive. It actually comes out to $570 if you count in the additional stuff, or $535 if you remove the DVD drive entirely. And that's not counting shipping. That is fucking ridiculous for a 5 year old machine with the cheapest possible parts...
To put things in perspective, here's some random shit I slapped together at one of my favored vendors... keep in mind I limited it to a machine that comes with a copy of XP, and I didn't shop around at all, so this is certainly not the best price that can be had:
A refurbished Lenovo, with XP included - $159.99
Upgrade it to 2GB of RAM, with two 1GB sticks - $29
Also add a much faster processor - $53
A terabyte hard drive to replace the old 80GB - $89
And, how about a better video card too, because why the fuck not - $42
That's $373 total. Add in about $30 for the shipping (assuming you're in NC as your username would imply), and you're still coming out with a much better computer for over $130 cheaper than that other machine. If you went with current-gen parts and tracked down a copy of XP separately, you could do even better for a similar price.