Are you looking for a 7.1 or 5.1 set up? For your budget, I would go with a good 5.1 set up rather than trying to go with a rather so-so 7.1 set up. I would recommend the EMP Teck, but it will probably put you a little above your budget.
For example:
Left / Right and Surround Left / Right
E5Bi Bookshelf speakers X 2 $500
Center Channel
E56Ci Center Channel X 1 $450
Subwoofer
ES1010i Subwoofer (Dual 10" Sub) x 1 $324.
Emp Tek has their sub on sale right now for $324. So, if you can afford the difference $324 - $193 = $131 more over your budget.
For a total of $1274.00 for speakers only. Emp Tek has a free 30 Day return policy if you don't like them.
Total with AVR $1274 + $358 = $1632
HTD Speakers
Level 3 Bookshelf x 2 $598
Lever 3 Center x 1 $199
Level 3 Sub x 1 $429
Total $1226 for speakers only. If you buy the VSX-1122K receiver for a total of $1226 + $358 = $1584 This doesn't include tax or any shipping if applicable.
HTD has a 30 day Free return policy if you don't like them.
If you want to go the more inexpensive router, and most likely you will want to upgrade later like I am doing. I would recommend
Pioneer FS52 towers x 2 $200
Pioneer CS22 center x 1 $100
Pioneer BS22 bookshelf x 2 $200
Sub Klipsch RW-12D x 1 $280 (on sale at newegg)
Total $780 on speakers. This doesn't include tax or shipping if applicable.
Total with AVR $780 + $358 = $1138 This is for a 7.1 set up.