If you don't think building boxes out of MDF will be a problem, definately don't drop the DIY idea for the whole system. Just build speaker kits where the engineering hard part has been done for you.
$400, especially in the used market will buy an very nice receiver (HK, Denon, Onkyo, Sherwood, etc).
Then visit these sites to decide how to spend the remaining $1000. If need be, build raw mdf boxes until he has some more money to apply a nice finish.
http://www.adireaudio.com/
http://www.gr-research.com/
http://www.madisound.com/
http://www.speakerbuilder.net
http://members.tripod.com/~terrycthe...um/page12.html
If you don't have to buy tools, don't get to elaborate with the finish and are willing to spend the time doing the building, DIY will result in a significantly better system than commercial for the same money spent (especially from non internet direct brands).