You can maybe find a compatible DVD player for about 100-200 $ and spend the rest on a low-end receiver + 5.1 loudspeaker kit. But IMO this is not a very good idea. The HT kit won't take you above CD sound quality. So I think you should raise the budget, maybe building the system little by little:
1. Get the basic player, for example a Pioneer DV563 2. Go for a receiver bargain, for instance obsolete Marantz models 4300 or 4400. 3. Get decent main loudspeaker, preferably from a product range that contains all 5.1 speakers. 4. Top up with center, surround and subwoofer when possible.
Doing this, I got a compatible system for about 2000 euros. But you will probably be able to spend less, prices are lower over there.
Thanks for the input but I don't really have much more money to spend. Although I did stumble across the Pioneer HTD-540DV which is $475 and comes with a DVD player with DVD-A and SACD. Does anyone have any experience with this model or know of another similar one?
Pioneer has used decent DVD-A/SACD technology in low-end standalone players. If you're lucky, they put some of it in this combined one. Big questionmark is receiver. The watts are given at 10% distortion, which is quite audible. Then again, it could sound much better than that at let's say 1/3 volume.
I really don't wish to disencourage you, IMO SACD/DVD-A can actually be a way to improve home audio without spending a fortune on high-end gear. But I believe you should listen and compare this HTiB with separate low-end components. If what you hear makes a difference, then I think you should consider buying discontinued models on sale, or second hand gear.
Then again, these are my opinions without even having listened to the particular Pioneer HTiB you mention. Of course, what really counts is what your ears tell you.