I need help putting together a budget system

Active Speakers and a DAC - I agree with Ajahu. Genelec 8050A (in white) with Apple Mac and your choice of DAC would look real cool in a PC setup and yet give most hi end systems a run for their money for sheer sound quality.

Thanks for the responses everyone, to answer a few questions

The room is going to be 12x16. It will be my office and mine alone so the gear can look like whatever. I like wood but I also like interesting looking gear. I love the look of exposed tube systems but dont know where that falls in the budget.

I was thinking that my desk would be on one of the 16' walls facing the other, but if that's not a good distance from the speakers than I am up for changing that around.

What I love to listen to most is acoustic music piano and guitar especially live recordings if they are done well. I want to hear every everything such as the incidental sounds like fingers on strings and breaths.

Its funny that you mention the Project debut III I used to have that very model and a Rotel pre.

Thanks again everyone.

Room makes a huge difference, well size does matter. I now change the speakers to Paradigm 20 Actives (no longer made, but come for sale fairly regularly), since you now don't need an amp, I would suggest getting a VPI Scout turntable, cartridge of your choice. That's still a nice system. Also, if it's an office you don't need a music server, just run your iTunes from your computer into the DAC. So buy an isolation stand for you turntable now.

I get the joy of the active speakers approach but unless I am missing my engineering, multiple sources (say DAC and phono preamp) are going to be pretty unwieldy.

A lot of nice integrateds out there with very respectable MM/MC sections which would give you the option of adding your TT when you were ready.

Also there are a whole lot more choices in passive speakers then active.

BTW since you mentioned you enjoyed designery looking gear, you might look for a used pair of the Gallo 3.1's. Cool looking, easy to drive and they should give you plenty of the detail and intimacy you crave.

I don't understand why active speakers are a problem with mulitple sources? You are just forgoing the amps, the signal still comes from a preamp that switches the sources, and manages volume.

I love the Gallos, I have had them before, it seems to me they would be a bit much for that space.