I can give you my opinion for what you are looking for "on the cheap"
as it were. Great price without compromising quality. I had a similar
budget and after doing much research, hours and hours of it, on various
consumer review sites and dedicated audio web sites, I was lead to
audition the Athena AS-B2 bookshelf speakers.... I am telling you,
for the price that these little gems are going for, they are worth
every penny. I listened to these next to JBL, and Infinity bookshelves
of similar size and specs, and these sounded the best, with at least a
hundred dollar less price tag to boot. If you can go check these
speakers out, it will be well worth it. Takes a few hours to break
them in, but they sound wonderful.

I bought the AS-B2's for $225.00 Can. and then went for a quality
cheap A/V receiver and settled on the Denon 1602 which I purchased for
$450.00 on sale as well. This will be your best bang for your buck in
my honest opinion. And will cover your budget even with taxes
included. (I am assuming you already have a CD player or DVD)

I have since then picked up the matching center channel and two rears
plus the AS-P300 subwoofer. Just pick up parts at a time and build
the system you desire, Just be satisfied with your purchase. You will
set yourself crazy trying to acheive perfection. Rearranging your new
equipment is a lot cheaper than a new system every two years. You can
always do little tweaks here and there.

I hope this helps you a little.