New sound system, $5000 max- what a would you do?

Based on an average size listening room...Source:ANY decent quality DVD Player from Yamaha/Marantz/Denon etc..with a Toslink Out $200.00...Integrated Amplifier:Peachtree Audio Decco 65SE $800.00...Speakers:Harbeth Compact 7ES $3000.00...Headphones $500.00...Stands & Cables$500.00....

Depends on what kind of music he's into for speakers.  But for the rest, I would go for one brand like Cambridge or Marantz so the guy has tone controls.  Budding audiophiles need to add some bass here and there.  Plus, he can use one remote for the amp and cd.  For speakers, assuming he's partial to pop music, I'd go with maybe a Wharfedale tower or maybe one of the Axiom speakers.  It's pretty far from high-end, but it's better than most people are used to.  I set a friend up with a system like this and it's quite listenable.  Oh, forgot the cables.  Probably just some Blue Jeans Belden and maybe a $150 Audioquest IC.  I would also recommend a Wiremold power strip with a few Volex PCs, just to have something half decent.  

I second the volex  power cords

I read I remember when the Wiremold strips were $40! 

Zavato,

Are those the power cords that retail for 7.00 and sold thru electronic parts online?

Since when are the Harbeth's 3000.00? I thought that they are retailing closer to 4000.00.

I would tell my friend to go to hell with this idea of me assembling a cheapo system for him.

Volex power cords are ultra cheap but use Belden shielded 14 awg cable

I think I would advise my friend go listen to some speakers in the $2000 price range, select a pair that pleases, then build around those. I would also encourage my friend to listen to a more forward/detailed system vs one that might be described as more laidback/musical, so he gets a handle of what his preferences are. Understanding his preferences and system environment is paramount to provision of the best advice.

I would enjoy assisting my friend in this quest. I have helped many having budgets less than the one proposed here.

AP Oval 12 is a very good match with Maggies , nothing anywhere near its price is better.

Which is why I said Oval 12 with the .7's! And the H80 has more than enough grunt to drive the .7's to reasonable levels. 

I am am tempted to build this as a 2nd system for myself!