Nosebleed, take some time and REALLY cruise this forum- you'll learn a ton, and soon be able to answer many of your own questions. That said-
It is possible to build a kart for $400, but there are a few factors involved. You've gotta have some tools already, the big one being a welder, or a good buddy with one. Secondly, you're going to need mechanical knowledge and ability, fabrication skills (even if only basic ones). Third (and this is where the real skill shines), the willingness and ability to get used stuff cheaply, fix it up, and make use of it. A good example might be locating a non-running snowblower at a garage sale for $50. You get the engine going for the price of a couple of gaskets, grab the wheels and tires off of it, and maybe some driveline goodies like a centrifugal clutch if you're lucky. Bang! You've just saved a ton of money, but it does depend on tools and skills.
Oh, and patience. Great deals (or even free) on cheap, useable parts don't generally beat down your door. Lots of searching and waiting.
It can be done- I built my kids' kart for about $200, which included the purchase of a brand new engine and clutch. I also scavenged my arse off and recycled a lot. The steel tube was a roadside find, Many of the steering and driveline parts came from a free, scrap lawn tractor. The brake hydraulic parts were from a motorcycle. The front tires came from a broken garden cart- you get the idea.
Cheers- Chris