1) $1000, could go up to $1500 if i think its a larger jump in quality, not apposed to buying part now and adding on to it in later years.
2) My Basement in my House, neighbors house is about 20feet from my exterior wall.
3) The room is 21x14, the main movie viewing/ps3 area is about 12-14.5 depending on where you sit, typical 12 for games and 14.5 for movies. I would focus the sound on the sofa as even though i watch most tv from the computer which is 18 feet ish from the tv. While i do watch most regular tv from the computer area it's generally not as important or dedicated viewing.
4) Nothing
5) Allowed, yes. Generally not excited about the idea, but could be convinced.
Ok Nester here are a few options
I am not sure what the Canadian price will be so if they are over budget my apologies
If you want the equipment to last and build on over a few years you will have to buy a decent AVR ( these things change every year ) so it best to find one with the most options at the best price. Saying that, the best one for price to performance I found is this
Amazon.com: Onkyo TX-NR818 7.2-Channel Network A/V Receiver (Black): Electronics
As for speakers, here are a few options.
If you want an affordable 5 or 7 surround speaker option then go with these Pioneer speakers I recommended to Sean a few months ago ( i have a pair as well )
Amazon.com: Pioneer SP-FS52-LR Andrew Jones Designed Floor standing Loudspeaker (each): Electronics
They show up on sale very frequently ( mine were $90.00) at Best Buy a few months ago. These will last a while and sound great for the price.
Another option for speakers
The receiver I suggested has what they call pre/outs so you can use it to bypass the internal amp in the receiver, to an external amp or to speakers with a built in amp
These speakers have an internal amp and digital crossover and sound fantastic.... I've heard them and for the price they are a great value.
Amazon.com: KRK Rokit RP10-3 Mid-Field 10-Inch 3-Way Powered Studio Monitor: Musical Instruments
You could buy 2 of these for a stereo pair now and add later if you want. Make sure you look at the size and can fit them where you want them, they are fairly large and heavy
QSC K series are similar speakers to the KRK's but are about $750 per speaker (Treyarch uses these in their HT demo room)
Subwoofer
Most important part of a HT system. A good sub will make or break a sound system.
SVS's cheaper subs are great for the price, I generally prefer sealed subs they go lower but are not as loud as ported.
If you can buy multiple subs I would go for sealed
High Performance Compact Sealed Subwoofers - SVS
It sounds like you will probably use a single sub so I would recommend
Maximum Performance Ported Subwoofers - SVS
What I would do if I were you is to buy the receiver and a pair of the pioneer speakers at this point your around $1,000
If you want more then buy the SVS sub (cheapest one if 499). At this point if you still want more you can always buy more subs ( 1 of the same subwoofer each corner of the room is ideal)
The matching bookshelf speakers from pioneer (
Amazon.com: Pioneer SP-BS22-LR Andrew Jones Designed Bookshelf Loudspeakers: Electronics) are sold in pairs and you can mount them on walls or place them on stands and for the price these can be added at any time. As a married man you can always sneak the cheaper stuff in later, its getting past the initial price hump with the wife that is always the problem.
I am sure I missed something but let me know if this has helped.
Forin