RAM: You can use more than 1GB by multi-tasking, or running 2 instances of Vegas at once. I don't think it would be a bad choice to go with 2GB.

Try to get pairs of identical RAM, your system will run a few % faster.

Drives: I would prefer USB2 drives, since I find removable drives not as convenient (have to power computer on/off). But it's up to you.

Externals don't always play back video without dropped frames. Internals would be a better idea for your main editing... with externals for archive or whatever.

Video cards: DVI is better if you are using high resolution LCDs.

NTSC output on a video card isn't very useful. Stick to your DV deck.

You might want a dual DVI Nvidia card if you have programs that take advantage of GPU acceleration. Otherwise there are lots of <$50 DVI + VGA video cards that should do you fine.

The Pentium D is good, although there are better processors. If you want faster rendering, spend more money on the CPU (roughly 90% of rendering speed depends on the CPU). If you really want to pinch your pennies, sometimes it's cheaper to buy an OEM computer (i.e. Dell) and throw in your own stuff as necessary. This can be cheaper than custom-building your own CPU... although there are things about OEM computers that aren't that great (very limited expansion and upgradeability).

Is anything more than 1GB useful for playback speed, smoothness, RAM renders and so forth?

I've done renders where the task manager showed I was using as much as 1.4 GB of RAM. If I didn't have more than 1GB of RAM then a lot of that would have been on the swap file (i.e.the hard disk) which is a lot slower than RAM and probably would have added many minutes or perhaps hours to the render time. But this was on a very demanding and somewhat processing-heavy (i.e. several FXs and compositing) HDV project. If getting 2GB of RAM is well within your budget, I'd recommend it. Editing and rendering digital video is one of the most demanding things you'll probably ever do with your PC.

Regarding external drives, there is an alternative that is vastly superior to USB and Firewire. Many of the newer motherboards have an eSATA port (eSATA means external SATA drives). It's every bit as fast as an internal drive. You can buy an eSATA hard drive enclosure at NewEgg.com for about $39 (drive not included). Some of these eSATA enclosures have both SATA and USB connections (to maximize portability).

That said, getting an internal drive is probably still your easiest option, as Glenn Chan advised. I have an external eSATA drive, but I use it for doing backups (not for video editing). It has the capability, but I prefer to use my internal drive which is setup in a RAID 0 connection. (Just a personal preference)