some thoughts...
I've suggested this case to Mike, solely because it looks like a console rather than a PC, but also can fit an ATX mobo:
http://www.newegg.com/Product/Product.a ... gnorebbr=1
Based on the recently released specs of Alienware's Alpha "Steam Machine," I feel like an i3 and 4GB of RAM would be plenty fine for Mike - especially knowing his gaming preferences for 2D games.
Ideally, a wireless 360 pad would be great, though the official MS receiver is getting tougher to find it seems like, and not sure I trust those knock-offs. Maybe a Logitech F710?
I'd also suggest a wireless keyboard/trackpad combo just in case.
The OS... since SteamOS won't be ready this year, then it's between 7 and 8. I know Mike currently hates 8, and I can't blame him too much. My thought was that either can be forced to just launch straight into Steam Big Picture mode though at bootup. But 7 might still be good for him in case he does any non-Steam games.
Mobo - no idea. But it would be wise to have integrated wifi.
GPU - no idea. I'm guessing something entry level. I've got a Radeon 6670 though I'm not sure if it's working or not.