I think you can do it within your budget. People around here really like the Sony HT receivers. I like my Yamaha HT receiver a lot, but the Sony's get really rave reviews. I would not buy any of the other consumer-grade audio companies. I'm not sure of the retail on the Sony, but I'm sure someone can advise you on which model and where to look. You may want to specify how much power you are thinking of. You can't get really high quality DVD or CD players for what you want to spend, IMO. However, you can pick up a Toshiba or Samsung on Newegg, eCost, or other on-line retailer for cheap. Some of the cheap DVD players sound pretty good, but you should consider using the digi-out and using the receiver for your D>A conversion. The on-board DAC in the receiver probably will sound better that the one in the player. Make sure that your receiver and player both have the same digi connections (coaxial or toslink). My Yamaha HT receiver has both coax and toslink inputs and I suspect that this is standard. Modern DVD players all play CD formats so I'd be thinking of a DVD player for audio playback. You will need 2 in order to play video silently and audio simultaneously. I doubt this will be a problem with the Sony receivers (I can do it with my Yamaha).
The other thing to consider buying a used CD player for audio playback. You can pick up high quality gear for cheap if you know what to look for. Again, folks around here can give you some advice.