If you are getting the computer new.... W7 will generally be the OS. If it is a used machine, and costs you very little.... X1 Essentials will run fine on XP.
As far as the rest of the gear... yeah... that works. You gotta do what you can with the budget you have to work with.
My studio: I built a custom machine 3 years ago and used the i5 Intel chip. I installed XP Pro and 4 GB of memory. 2 hard drives are in the machine.
I have MC 4, 5, 6 and X1 essentials installed.
I use a firewire (FW) Focusrite Saffire interface but would recommend a USB interface now mainly because FW can be problematic if the chipset is not the TI chipset........ M-Audio is good and they use USB & ASIO drivers. The latency will depend on the card/interface and the drivers. Most good interfaces will give you a low latency that you can work with easily. Most latency under 10ms is not noticeable to the average person or musicians either.... that's like standing 10 feet in front of a guitar amp. Several people here could write a treatise on latency but as for me, if I can't hear it, I'm good.
A Shure SM-57 is a decent mic to use. It's pretty standard on stages all over the world and will work OK in the studio. However, a nice condenser would probably be better to use if you are doing much acoustic guitar stuff. I use a Rode Condenser for all my recording although I do have an SM-58 as well.
For monitoring.... I use Mackie MR-5's. I used them for about a year and a half and then added a sub to the studio. Subs are good and can be added later as budgets allow. On a tight budget, I would recommend spending around $350 for a pair of monitors. Audition some in the store because while everyone says you want "flat response" monitors.... (and yeah, you do) I have found that they all claim to be flat but compare them side by side with the same exact source material and you will hear a difference. Buy the ones you like and learn their quirks.
Fact is, while it's cool to have the latest, fastest, gear.... most computers will do a superb job as long as the interface is a good interface. Heck... I ran my studio on a factory laptop...Dell off the shelf, with that same firewire interface and recorded like that for several years using Music Creator 4 (MC4) by cakewalk. That was a Core 2 with Windows Vista. Still have it and it still works.... the memory was either 1 or 2 GB.
That lappy ran MC4 superbly.
Work in your budget, and upgrade as you can afford and find the need to have better gear..... right now.... just get started.
My philosophy is this: My system works. It is stable. If I can run it fro 10 years, and it does everything I need, who cares if it is XP/32bit? When it has a hardware failure, I will attempt to repair it at that time. If the hardware is not available, I will then worry with the upgrades needed to get back to recording.