That budget is fairly tight for what you're looking for. I think you're going to have to eschew the HDMI receiver for now, as the cheapest receiver I know of with HDMI is $1300. Ouch.
Is it possible you could sell the Sony system to increase your budget? Here's a system similar to mine. I think it could be in your budget.
Receiver: Pioneer VSX-1015TX $450 at Best Buy
Speakers: 3 BIC DV62CLR across the front, $315 shipped, 2 BIC DV62si Surrounds, $121 shipped
Subwoofer: Cadence X-Sub, $250 shipped
DVD Player: Pioneer DV-578AS ~$100 shipped
Cables and Misc: $100
Speaker Stands: ~$100
Total: $1436 shipped out the door
Yes, it is out of your initial budget, but I guarantee that it will rock your room. Hard. I think that if you sold the Sony System, you could afford something similar to what I have above. But there are lots of things to think about...