The quickest way to make a thousand-dollar mic sound like $100 is to record in a bad-sounding room. The previous writer is correct that actual soundproofing is probably out of the question. Keeping sound in or out of a room takes major bucks and construction. But you can do quite a bit with acoustical treatment, which is what you need to make your room decent for recording (even though it won’t keep the baby in the next room from ending up in your mix, or that truck going by!) It helps to set up in a basement. Masonry or concrete is excellent for stopping sound (especially when you’re underground!)

For acoustical treatment, there is something better than the fluffy insulation. It is called insulation board, industrial board, curtain rock, and a few other names. It is insulation compressed into a 2, 4, or 6-inch rigid board. Its sound-controlling properties are much better than the fluffy stuff, or any foam rubber product, including the stuff that’s sold as acoustical treatment. I researched dozens of products, and found the best were Roxul brand RXL Safe, Rockboard 40, Curtainrock, and RHT 40. I don’t know if Roxul is available in your country. The thicker the board, the better. If you get several 4-inch panels you can place them strategically around your room, near walls at different distances.

A word about monitoring with headphones. On a budget (yes, that again) it’s OK, but to really do a good mix and not fatigue your ears after hours of mixing, you might consider a decent pair of monitors. Have fun!
References :
Microphones: http://www.soundonsound.com/sos/1995_articles/jun95/microphones.html

Room treatment: http://www.ethanwiner.com/acoustics.html

Sounds like you have a good idea of what you need already. For some help on choosing gear and how to bring it all together check out this site.

http://www.basic-home-recording-studio.com/

It’s a step-by-step guide to building a home recording studio on a limited budget. It deals with everything you listed above except for soundprrofing. In my opinion, your money would be better spend on other parts of your setup - but check it out and decide for yourself.
References :
http://www.basic-home-recording-studio.com/setup-diagrams.html

Your budget is pretty low so I would stay with the PC. It is easy to upgrade and get software for. If you continue recording or do it professionally you’ll have no choice but to get a Mac. I work in LA and everything is Mac. For now, though, you are fine.

No one can tell if a song is recorded on Cakewalk, Protools or Logic. Digital is digital. If you have a copy of Cakewalk then I would suggest using it. I used that software for years and it served me well.

For your headphones, I would suggest the Sony 7506. Those are a mainstay at every studio. Everybody uses them and they do not cost much. About $90US.

You didn’t tell me what you plan to record so I can’t really advise you much on microphones. You can’t go wrong with a Shure 58 or a Shure 57. A great budget microphone that will work with vocals is the CAD E-100. Find an old one used and you’ll be surprised by what a $100US microphone will sound like.

On your budget you will not be able to afford professional room treatment. I noticed that you called it "soundproofing" but you can, in no way, soundproof a room. I’ve built a number of recording studios and the construction required to soundproof a room is just short of silly. You do, though, want to treat the room a bit so that whatever you are recording isn’t bouncing all over the place.

I would suggest going to the local hardware store and purchasing that "blown" insulation stuff that comes packed in compressed cubes. That and some fabric can make a great bass trap or you can open up the stuff and make your own panels.

Good Luck.
References :
Former Facility Manager - Full Clip Audio
Lead Designer - Black Box Analog Design

http://www.amazon.com/M-Audio-Track-Mobile-Interface-Preamps/dp/B000BD31ZW/ref=sr_1_1?s=musical-instruments&ie=UTF8&qid=1298265891&sr=1-1

Your PA system mixer will probably work just fine as long as you know what you are doing.
References :

Nothing special, just loud.
References :