On that budget with that room, I would be looking for used stuff. Decent used AVRs are pretty easy to find, keep your eyes open on ebay, craigslist, audiogon.com, and the classified sections at message boards like this one, AVSforum, Hometheatershack, audioasylum and so on. Some brands to keep an eye open for are Pioneer, Harman/Kardon, Yamaha, Onkyo, Marantz, and maybe Sony if you find a good deal on one. There are other good electronics manufacturers too.
For speakers, I would try to get higher sensitivity speakers if I could. Honestly you don't have much of a budget, so you might just try going for the front two to start with. You might look at Klipsch speakers, they are very efficient, and you can get some great deals on used ones at the
Klipsch forum classifieds, in addition to the above mentioned sources.
It's a bit harder to get a decent used sub, as good ones tend to get sold quickly. For subs, in addition to the resources I have already pointed out, keep an eye out in B-stock sections of subwoofer maker web pages. Here are the pages for
Outlaw,
Hsu, and
SVS. Hsu also has a
classifieds area in their forums, sometimes you can find a good deal there. My advice is to wait for a good sub deal, especially on your budget. I would go for a sub from the above mentioned manufacturers, and also Rythmik. Go for a ported 12" design at the very least; a 10" or sealed 12" will not be adequate for your room unless you only listen at very modest volumes. There is a not too bad deal in the Hsu B-stock section, those HB-1 speakers are fairly powerful and might work well for you, and it comes with a ported 12" for just over $1400 shipped, you might give that a look.