My road projects have fallen by the wayside because I found a beater to ride around the city (dads free spirit from ~87) and I've got my trek otherwise, but some friends ride at hartwood every week and I'd like to join them. So now I'm building a mountain bike and need some help, just to know what I'm looking at. Tax return came, so its time to buy some parts.
I got a GT frame for free from a friend (I have an FSA crankset too, but I'll get to that later).

It's rear suspension which brings me to my first question - is it unheard of to have a rear suspension frame with a rigid fork? I'm trying to build as cheap as I can, so I would either be able to get an decent rigid fork, or an alright suspension fork.
I've also never had to pick out a fork/headset before.

The ID of the bearing is 1 1/8", but I'm not exactly sure what I'm looking at here. I'm thinking the bearings need to come out and be replaced with a new headset? Sheldon tells me I'm looking at a threadless headset, but I don't know much more than that.
Thanks for any wisdom.