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InformationWeek columnist Fred Langa set out to build a 1 Terabyte Fileserver for around $500, and details the steps in this article. He used a bare bones kit from Tiger Direct and 4-250GB hard drives that he bought for around $80 each.
Its a great how-to for completing this process, with pics and notes along the way. The only question that came to my mind is how to backup this much stuff. You could add a RAID controller and have a 500GB file server, with each pair of drives being a mirrored RAID.
Create Your Own Cross-Platform Backup Server
Maxtor 1 Terabyte drive
Where is RAID?
Issues Arise Between RAID and Adobe
Samba 3: A Nine User Network Server
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