Why not use a Mac Mini?
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Mac Mini is a good suggestion. Also, any mini-atx form factor computer with an upgraded hard drive would offer the same functionality. I built an HTPC that only runs XBMC (look up some screenshots, it's awesome) and it handles everything for me. I built mine for sub $300 and use it to stream music from network attached storage, but for another $200 I could have just as easily added 2TB of storage and never have to worry about upgrading the hard drive again.
If you're not into DIY, I'm sure you have a techie friend that would be more than willing to put something together for you for less than what you would be spending on some pre-assembled system from Yamaha.
Sorry, I should have been clearer.
A computer integrates into your system in the same manner as any other source. Either you will use it as a transport and feed the digital signal (via USB, optical, or coaxial) into a DAC (digital to analog converter), or you can get an audiophile grade sound card with RCA out jacks and hook the computer directly into your preamp.
I love my Alesis Masterlink and it is in your budget but only 40 gig drive. I use it to burn compilation CD's. Music played off the HD sounds awesome. You can hack it and put in a larger hard drive, instructions on line but not sure of the max HD size that the bios will accept. Tascam makes a rig that uses CF Cards. There are 128 gig cards available, but they cost more than the rig. No album art or video out on each. By the way, there is no comparison between cd's burned on a PC (I have a $5,000 gateway + upgraded PC and line conditioner, lacie external CD burner w/FW) and the Masterlink. Masterlink is studio quality; PC just too noisey.
I have a Yamaha CDR-1000, but I've only used it for one thing... copying vinyl to cd. It does a great job of that. I must admit, I consider Yamaha a fairly low-end brand, but it feels like it's built well, and honestly, if I play cd's through it, it sounds like my Rega Apollo. I am thinking about buying a DAC to see if listening to cd's is really worth the time.