No links, just a bunch of suggestions...
Lonely Planet makes a book called "Europe on a Shoestring" that should help.
Also, Rick Steve's makes pretty good guide books, and you can get one for all of Europe in general. His books are really cheesy, but have good information.
Fly into a place like London, Zurich, Berlin, Rome, or...which ever is cheapest. Then make a big loop from there.
Travelling by rail is pretty easy. Do a night train, make sure you get sleeper car! (ask me how I know) We actually met guy who was backpacking through and was only taking night trains. Thus saving money on lodging.
You can also find REALLY CHEAP flights around Europe. Try:
www.easyjet.com
www.ryanair.com
If you go on ryan air daily you can often find free flights, where all you have to pay are taxes. My wife and I flew from London to Venice for $35 per person. But the flights are at out-of-the-way airports. It would be like flying into Carlsbad versus San Diego.
Where do you want to go? What do you want to see? Churches, castles, everything...Personally I like to try and spend at least 2-3 days in each town. That way you can settle down and experience life.
Places to go:
London (expensive, but everyone's got to see it at least once)
Paris (mmmmm, food)
French Riviere (Nice, Monaco, Canne, St. Tropez)
Venice (ooo love!)
Tuscany (I have a great recommendation for a wonderful villa!)
Florence
Rome (what else can you say, it's rome)
Capri (blue grotto)
Prague (Europe as in your mind's eye)
Vienna (we only spent 24hrs, NOT enough)
We still haven't been to Portugal. I hear that place is still cheap(er), and very nice. I also wan't to go and surf Biarittz. Oh, and the Alps, pretty much anywhere. I also want to go back to Sardena, Italy. A definite must if you have time. Also go to the Cinque Terra, in the northern coast of Italy.
Oh yeah, lodging. You can hostel it or find decent "pensions" which are essentially a very basic motel. After all, you just need a place to rest your head at night.
If you ever want to talk more about it, just let me know. I don't need that much of an excuse to venture north. :costumed-smiley-007