1. A NES (duh)
You're free to use a non-working one, as the only part you'll be using is the case.
2. Computer parts
You will need a motherboard and processor. Because of the tiny size of the NES case, you're not going to be able to fit a normal ATX motherboard. I used a mini-itx motherboard. They are 17cm by 17cm, so it's a great fit for the NES case. Mini-itx boards can be bought at least here
. I bought a 'Jetway 1.5GHz C7D'
board. It was relatively cheap and powerful enough for my needs. Mini-itx boards come with an integrated (built-in) processor, sound card and video adapter. This is great when space is a luxury you can't waste. You should make sure the processor won't generate too much heat. There's little space for air to move around in the case, so it might get a bit too hot. I learned this the hard way...
It's also important to have a tv-out connection: either S-Video (preferred) or Composite. If you have an LCD screen you might want DVI or HDMI.
The motherboard needed DDR2 memory, so I got a 1gb stick of that.
I already had an old 40gb 2.5" laptop hard drive. It won't work with a standard IDE connector, so I got a 44pin->40pin IDE adapter.
I also had a slimline DVD/CD drive from the same old laptop. It also needed a slimline -> IDE adapter to work.
You will need a PSU. There's a problem, though. ATX power sources are too big to fit inside the case. I ended up using an 80 Watt picoPSU. It's a tiny DC-DC power source. It works like a laptop's power source: you attach an external power brick that handles the AC/DC and provides the picoPSU with 12V DC power.
You will need leads to attach the power led, power switch and reset switch to your motherboard. I got them from an old computer I had lying around. I also ended up using some old case fans I had. If you've chosen a cooler motherboard/processor, you might not need extra fans. There are some very cool fanless VIA EPIA boards, but they're not very powerful performance-wise.
You won't be needing any special tools other than a Dremel or something similar. It's used for cleaning out the case bottom and cutting out the hole for the backplate. You'll also need to solder some wires for the power/reset switches.
NOTE: Take care when handling the motherboard, memory, etc. They are pretty sensitive to static discharge, so make sure you're properly grounded!