Yes, will you consider used? Would you be willing to wait a bit for somethng to turn up? Are you interested in DIY? Anyone can learn DIY and the DIY'ers here are knowledgeable and always willing to lend a hand.
For me, I break down components like this:
1. Quality of recording
2. Transducer (speakers/cans)
4. Digital playback device
Jewelry and dress-up:
5. Cables and miscellaneous tweaks
The only exception is analog playback. There, you have to spend money to get a quality device. It always pays to buy the best for vinyl, reel-to-reel and FM tuners/antennas. Antennas are about half the game with FM.
For $500, new, I'd look at the PSB Alpha B1 speakers. I got my parents a pair for Christmas for $179. They're terrific and much better than you'd expect, especially for the price. Pair those with any receiver you can find and you'll be happy.
If you're willing to buy used, keep an eye out for a used Magnepan MMG. They go $400-$450 and are worth every cent. You can find other older Magnepans for less, but I'm not familiar with them. Another superb used speaker is the ESS AMT-1 and variations. I got a pair for $300 last summer and love them to pieces. They don't come up that often, but grab them if they do. There is real magic in an AMT.
If you're willing to build your own, drop $350 or so on a pair of Jordan JX92S full range drivers. They have a couple of easy plans and singledrivers are wonderful. Another one to keep an eye on is the reintroduction of the Cicada driver at Eddie Current. A few years back, I got a pair of the Moth (Craig's previous company) Cicadas for $120 each. They're like little Lowthers. Craig said he's bringing them back, and they're well worth considering.
As for power, just get any receiver you can find. Preferably two channel. I like the older models from Marantz and NAD, but I have a 20 year old Kenwood I bought new that has soldiered on all these years. I should probably replace the caps in the power supply, bu it keeps going. You can definitely find something like that cheap if you look around garage sales, thrift shops, Craigslist, etc. If you want something stylish, check out the vintage Bang & Olufson Beomaster units. You can get the earlier ones for under $100 and they're made of metal and wood. They still look great (IMHO), too. I've got an old Beomaster 1900 here that I need to wrench on; probably the power supply. It cost me $40. You know, a Beomaster with MMGs would make people think you dropped several thousand on your rig while sounding pretty damn good, too.
For a digital player, check into a refurbished Sony SCD-CE595. Sony sells refurbs for $50-$60 now and then. They play SACD and CD, and is good enough to demonstrate the benefits of SACD.
As for cables, etc., forget them. If you want something that looks cool and is well made, reterminate Home Depot power cords and put black Techflex on them. They'll work and will look just like the high-end ones. Probably sound exactly the same, too.
Anyhow, get out and start scouring the used stuff. You'll be able to build a great stereo for $500.