If you want an all in one solution for sound, there are some HTIB solutions that are right around the $500 mark.
Onkyo 780
or
Rocket Tykes
would include a receiver, sub, and speakers for that price.
I don't know if those receivers have 6 channel direct input on them or not, so if you needed surround sound in games, you'd need to get a card like the X-Mystique to encode DD in real time for decoding.
Do you have a decent soundcard already?
If you're just going to be music and movies though, you don't need anything fancy. Even if you're only doing limited gaming you could get away with a much cheaper card and get "fake surround" from your receiver.
Chaintech AV710 would be a good card for music/movies and would leave you more money to spend on the sound system compared to other cards.
Oh, and about THX you mentioned, don't worry about that. It's mostly marketing.
5.1 vs higher.... 5.1 works just fine (it's what I'm using). You can go higher, but if doing so is going to reduce the quality in favor of quantity, then it's not a good idea imo.
If you want to do separates, it's going to cost you more than a HTIB, but you'll be able to put together a better system, you'll have more options, and if you like researching stuff it can be a lot more fun.
You could try to do wireless rears, but it's going to cost you a lot more to get something that does that well.
How big is this room going to be? High ceilings?
If you want a really awesome system someday and might want this to just be the first installment in the final system, you could get a nicer stereo set going now and then add to it later. You'll only have 2.0 initially rather than 5.1, but if you spend your budget on a receiver and two speakers now, you'll be able to get much nicer stuff than if you bought everything at once. I don't know if that appeals to you at all.
If you don't want to do a HTIB but want a 5.1 system right away, I would also suggest checking out Rocket ELTs like Tiamat suggested.
Here's a thread I started about them
I think this is the best $100/pair speaker set you're going to get. Three of these and you'll have a 6.0 set to start with.
Some others in this range would be
Infinity Primus 150s
Fluance SX-HTB 5.0 set
You'll need a receiver for any of these (your soundcard will not work on its own).
Refurb receivers are a nice way to get a nicer receiver than you would have been able to get new.
There are a lot of refurbs out there for pretty cheap.
Onkyo receivers from ecost are one source. They have a 6.1 TX-SR502 for $149 now... bunch of other ones too.
Harmanaudio on ebay sells factory refub HK receivers with a new 2 year warranty.
Anyways, lots of options out there. I got the older model of the one Tiamat suggested for $287 as a floor model for example.
For a sub, I would suggest
the Dayton 12" for a budget one. I think it's really hard to beat for the price. If you want to spend more, you can even get two of them and load up a corner of your room (or wherever sounds best, placing two can be a bit tricky).
For other info and suggestions, check out AVSforum and Hometheaterforum. They're like the HT equivalent of what Anandtech is to computers.
Check out
dolby for speaker placement.
Oh, and don't spend too much money on cables for hooking things up.
Info on speaker wire for example...
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