First System- need advice

I agree with the above recommendation that you listen to the Linn Majik, Tukans and Karik cd player. While this combo is a little over your budget, you might be able to buy some of the equipment used. In any case, it sounds very good.

Here is a very unconventional suggestion: Paradigm Active/20 speakers ($1600). An excellent small speaker with very powerful (135W bass + 50W treble) power amps and active crossovers built-in. Add a decent cd-player and a cheap QED volume pot (if the player has no variable volume) and you are in business. CDs to look for are from Marantz, Rotel, Pioneer in the $500 - $800 bracket. Later you can budget for a proper preamplifier and the rest of your sources and add a Paradigm Servo 15 subwoofer.

If you don't mind used equipment I would recommend Spica Angelus, Vandersteen 1c, Epos 12, Thiel 1.2 or SM?? maggies($500-700). An Exposure XX Line level amp ($600). The rest on a CD player maybe a Meridian 508.20. You can also find used Conrad Johnson tube gear at good used prices.