As russ mentioned, pretty much all electricity is created by turning motion. In most cases steam is used to spin turbines, which spin a generator.
Now, you can make a simple dc generator, but building your own AC generator is an entirely different trick. I'm even having a hard time finding an AC generator.
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&category=11756&item=3844454393&rd=1&ssPageName=WDVW you could use in a windmill type setup. While the ad doesn't give much info, it starts making power as soon as it turns over. Some motors require a certain rpm before they generate power.
This is a 24 volt generator, and, can be used to charge car or marine batteries. To get the AC voltage you want, just use an
inverter. Now, this is a 12vdc to 120vac inverter, but to save money you can just use any old alternater off a car or truck. I think you can get a generic chevy alternator from autozone for around $30. The inverter will be your biggest expense.
Now, one problem I'm picking up in your plans is the idea to use cardboard for the impeller. On a small scale project, this would work, but the amount of force to overcome to generate a decent amount of energy would not be attainable by cardboard wings.
You need something stronger for your windmill blades.
I would say the first thing you need to accomplish would be the windmill portion of your design. You need to make sure you can get your axle spinning some RPM before you worry about harnessing this spin. Keep in mind with the alternator hooked up, it will require that much more force to spin it over.
A typical alternator, in use on your car or truck takes anywhere from 3-10 horsepower. Going inbetween, let's say 5 hp. 1 hp =746w. 746x5=3730w of energy to spin the alternater at typical operating RPM.