Hi Clack. There are lots of ways to go here. You could probably make your intro into HT and music with any number of AV receivers like those from Denon and the like. Many speaker manufacturers like NHT, PSB, Definitive Technologies, Atlantic Technologies, and Paradigm sell very affordable 5.1 speaker packages. If you are willing to buy used, you can get better gear, but since you're new to this field I would suggest you go and listen to as much as you can, then look for sales or discounts from reputable retailers. That way you'll have less of a problem if you ever need to have your gear serviced.
Magazines like Home Theater and Widescreen Review are great places to get ideas for your home theater. Check out the equipment reviews and articles on setting up your system. AudioReview.com also has reviews written by people like you and me, not professional reviewers. Try doing searches in the discussion forums here for testimonials on home theater amps and speakers.
I think you'll be surprised how much value you can get for your dollar. An AV receiver, 5 speakers and a subwoofer is totally feasible within your budget. You'll find the journey and the destination equally enjoyable. You'll get a lot of satisfaction from doing the research, comparing notes with fellow enthusiasts, listening to equipment and finally enjoying it in your home.
Have fun and happy hunting.
