Equipment: This is such a broad category with so many variables, that it would be impossible to give recommendations on specific brands, models etc.., but I can point you in the right direction so you can make an educated decision.
First, to keep the budget for skyrocketing out of control, I would recommend the use of a good quality receiver vs. separate amps, tuners, etc. The foundation of your HT will be your receiver; all of the other equipment can be built around this piece.
I’m not going to get into what makes one receiver better than another, but generally, you get what you pay for. A lower priced receiver will have lower quality amps, may not have surround sound processing (ex. Dolby, Dolby Digital, THX) and may have fewer inputs/ outputs for audio and video components that a higher priced receiver.
A good quality receiver might cost anywhere from $400-$1000. Over the 1K mark you are getting a lot of bleeding edge bells and whistles and massive power amps which you may or may not ever use.
Which brings me to another point: power. How many watts are necessary? Well, that is totally up to you and your situation, but for a condo owner, I can reasonably say that you will not be cranking the shit out of your stereo on a regular basis.
If you are looking to put together a stereo system to listen to music first and watch movies second, you may not need to be reading this section. But if you are primarily looking to watch movies, then you need to consider a few things:
1) You want enough power to hear and feel the movie. You want the subwoofer to kick in and you want to feel a rumble when you are watching a scene in a movie where a space ship blows up.
2) You want your receiver to have enough power to comfortably power all your surround speakers. If your receiver is at near max all the time, your sound quality is going to suffer.
3) What are your speakers sensitivity rated at? Speaker sensitivity is rated in dBs. A higher sensitivity rating (like 90dBs) means it will take less power to produce sounds for the speaker; lower sensitivity rating (like 85 dBs), means that your receiver will need more watts to produce the same amount of sound.
4) If you live in a condo, your neighbors are not going to like you if you have a 300 watt per channel receiver. Neither is your wife. Trust me.
What does this mean? It means that if you have decent speakers, you should consider a receiver that can comfortably power speakers at 60- 80 watts per channel continuously and 80-120 watts at peak.
How do you find that? Look at the watts per channel rated in RMS (root mean squared). So, if a receiver is rated at 80 watts peak, 50 watts RMS it means that the receiver is capable of 80 watts, but will normally sustain 50 watts.
There are plenty of receivers from Denon (AVR-1906, 2106, 3805), Onkyo (TX-SR603X, 703X, 803), Pioneer (VSX-72TXV), Yamaha, Marantz that can fit into this range. I do not recommend Sony. More on that later.
Where to buy:
Digital Craze. I bought my receiver from these guys and they were very good. Really LOW prices and no tax. Recommended. http://www.digitalcraze.com/resultslast.asp?Category=14
Research:
Check out these forums for great discussions on HT equipment and installations:
http://www.avsforum.com –the best known HT forum on the web
http://www.hometheaterforum.com/htforum/index.php
http://hometheatertalk.com/httalk/index.php
http://www.hometheaterspot.com/htsthreads/ubbthreads.php/Cat/5
Good places for reviews:
http://hometheatermag.com/
http://www.audioreview.com/
http://www.soundandvisionmag.com/default.asp?section_id=3