A seperate physical drive is recommended more than a partition. If it's a partition, the physical hard drive is doing the exact same movement as if the scratch drive was on the same partition, only possibly worse. No idea where the name came from.
I recommend:
P4, at least 3 ghz with Hyper Threading
2 GB of PC3700 or PC4200 RAM
2 x 200 gig hard drives (in Raid 1)
1 x 36 10,000 RPM Western Digital Drive (for OS and software)
M-Box external sound device
19" TFT
Microsoft Keyboard and mouse
I think that this set up will be the most stable and suitable, while keeping in a reasonable budget. The P4 with HT is perfect for number crunching and will out perform an AMD 64 of similar spec.
Recording uses a hell of a lot of RAM so get as much as you can afford. There's certain ways of working out what speed to get but I'm not overly familiar with them.
The 2 x 200 gigs in Raid 1 means that one hard drive mirrors the other. You only get 200 gigs storage combined but if one of those hard drives goes, you can unplug it, put in an identical one and still have all your files as you left them.
The 10,000 Raptor will give a nice performance boost but nothing massive. Use this as your application drive and the 200gig drives as your saving and scratch drive.
The M-Box is only an idea. I'm not really up to date with external musicians sound devices so someone else may advise differently but I've heard good things about them.
The 19" TFT is plenty large and will be kind to your eyes, plus there's no noise from them (through guitar pickups)
The Microsoft keyboard and mouse, I just love. Think they're well built, feel nice and are very nicely priced.