The key to retro PC gaming is using a decent high refresh rate 5:4 ratio CRT monitor to play these older games on.
I recommend Windows 98 and XP to cover 10 solid years of gaming. No dual boot crap, use two separate hard drives for easy file system support.
I keep an old custom PC to avoid emulation issues.
X86 PC gaming emulation is blah, especially in virtual machines.
Abit NF7-S V2, XP 2500 clocked at 2.2Ghz or higher, 512MB / 1.5GB PC3200 RAM*, 256MB AGP ATI Radeon 1950 Pro, 17" NEC CRT, Antec ATX case, 16X DVDRW, Intel PCI 10/100 NIC.
Nice thing about the NF7 is the 8x AGP speeds, decent on board audio, overclocking ability, and SATA support. Also no shoddy Via or SiS chipset to deal with.
Good peripherals are also important. A Microsoft Sidewinder for games like X-Wing vs. Tie Fighter, an Aureal 3D Vortex or Soundblaster Live, Logitech Wingman gaming mouse, IBM Model M Keyboard, external speakers, etc.
A setup like this will play everything from Command and Conquer to Half Life 2. It's also good to also keep a spare Voodoo 2 or Geforce 2 in case you run into compatability issues with the Radeon. *Also may need to pull the 1GB stick when playing Windows 98 games as it can act strange with more than 512MB.
Fun times but keep it off the internet NIC only meant for IPX/SPX LAN gaming.