Dave and da boyz are leading you in the right direction.
Consider going your own route. You WILL be better off
You can get a A PAIR of Cambridge Sound Works Model 6's for $99. That's TWO really, really good (particularly for the price) speakers!
http://www.cambridgesoundworks.com/store/category.cgi?category=spk_bookshelf&item=53CW0115AA000
I've heard these at a friends house. They are good! ...VERY good.
Heck, for that price you may want to get two pairs for $200 and see what they (CSW) recommend for a matching center channel speaker. Odds are you can get five matched speakers for around $300 or a bit more.
If money is tight, you can always add a sub later. These should sound good enough that you won't feel cheated out of an enjoyable experience, particularly as far as music is concerned.
Receivers that are more than suitible for your needs can be had from anywhere between $150 (or so) on up. What you've got your eye on looks more than up to the task at hand.
As for a DVD player, well, these are basically commodities nowadays, available from virtually anywhere from $20 on up. All will handle the basics, particularly considering your projector situation.
So, that budget you've got in mind can really go a long way if given a little thought...