The system by anamorphic looks pretty sweet. If you are willing to go with a refurb you can get it from JR for $199 with a one year manuf. warranty. Not sure if it does mp3's though, here's a link to Onkyo for you to go over it.
Link to onkyo This thing has a ton on connectivity options. You could get the refurb and a denon 555s dvd player from JR for under $250. Also get yourself a seperate sub to fill in the lows if you want because the MC-35 has the preout. You could get all that and still be well under your $500.
You may also want to look at this
JVC system because it does everything you wanted. JVC makes some nice sounding shelf systems IMO.
There is a lot of wisdom in what anamorphic is telling you. I think you would be best served by purchsing a stereo amp and a pair of bookshelfs along with a DVD/CD player. How do these grab you.
Denon dvd $80 Harman Amp $229 and
BIC Bookshelfs $96 . That is a total cost of around $400, and I'm certain that this setup will vastly outperform the shelf system option, even though it takes up roughy the same room. I'm not trying to be pushy, but this is the Bang for the buck. Good luck with the purchase, hope you get something you enjoy.