Need suggestions on building Audio system from scratch (w/ budget)

Well the JBL NSP1's are a full set...smallish but nice and go for somewhere in the vicinity of $300 shipped. Look for posts by a Mr. Phil Iturralde as he's quite familiar with the JBL's in general and may well suggest other capable speakers.
For a receiver and or DVD player (you should be able to rustle up a DVD player that does DVD's, is progressive scan, will play SACD, and a host of other features for under $250. Consider browsing around at HTF's http://www.hometheaterforum.com/deals/deals.php as some specials come up from time to time. Another good place to look for deals is www.onecall.com. You'll find Marantz products being heavily discounted (cuz they're refurbs but typically come with a 1 yr manufacturers) over at www.accessories4less.com and if you're into investigating additional refurbished units, they can be found at http://refurbdepot.com and they're fine to deal with.
Why don't you browse some of these sites, come up with 2,3,4 choices in each particular category and then consider reposting in the HTF, receivers, speakers, audio/video areas to get further feedback and the various members will point out strengths, weaknesses, and their own particular take on things. I think you'll do rather well and when the time comes that you need something more capable, I'm sure it'll do spectacularly in your bedroom.

 

It is absolutely easy to do. I was able to put together a system I am very happy with for that amount of money. I bought a H/K AVR125, Polk Speakers, Sony DVD for that amount of money. I think you will be surprised at how good it can perform. Of course I got lower end equipment, but I think it is great(and it is better than the nothing I had before). I will upgrade when I have more money. It is a great hobby.

I think it is more fun to go to actual stores to try out new equipment rather than shopping on the internet. I know you can get better prices on the internet, but nothing is better than seeing for yourself. I think it is especially important to listen to speakers before you buy, it is amazing how different speakers in the same price range can sound. Buy what you like and you will be happy.