Caviar Green is a bad choice for an editing system, too slow because of the 5400 RPM. Change that to a Caviar Black.

Ok I will change to the black.

About the Mother board, its "open box" should I trust that or pay the extra $50 bucks to get one from tigerdirect?

The processor is an Intel single core 3ghz...2gig of DDR. ...

1. Will that processor do the job?
It's subjective, how fast you need it to encoding and the type of work but for simple editing the answer is yes even for HD. You could add 2gb ram if the mobo allows, 32bit operating sys can only use 3.5gb.

3. Hard drive configuration.
two 1tb 7200rpm drives are sufficient, no raids needed.

4. two 19" Samsung 5ms monitors for $200 sound cheap?
I use single 19 Samsung, larger monitors are nice but if you're trying to save money two smaller monitors give more real estate for the buck. What is large enough is also subjective, number of ppl here edit on laptops.

I think you made a mistake trying to save money by getting a used computer, for a little extra you could have gotten a new entry level multicore computer. But thats water under the bridge, your system is sufficient for video editing so just move forward with what you have you can always upgrade later.