Home theater setup recommendations?

For starters or for someone who isn't an audiophile such as your daughter I think a good quality AV receiver would suffice it. As suggested by audiotroy earlier I would look for audiophile brand receivers eg NAD, Rotel, Arcam, Audio Control, Anthem, Cambridge Audio for good reproductions of both music and surrounds (movies) and avoid those Japanese mass produced AV brands as they usually won't sound that good for stereo music playbacks but fine for movies (surrounds). 

The Cambridge Audio CXR200 av receiver retails for $2k but recently I think there's one offered for sale here for around $1200 if I'm not mistaken. This is a quite musical sounding receiver and this will be your cheapest audiophile receiver option IMO. The Cambridge isn't loaded with features or bells & whistles like those found on Japanese mass produced AV receivers but for stereo music playbacks the Cambridge CXR 200 will sound better than most if not all Japanese av receivers. 

The NAD, Arcam, Rotel, Audio Control make great sounding av receivers especially for stereo music reproductions but cost more than the Cambridge Audio. So your best cheapest audiophile quality receiver will be the Cambridge CXR 200. 

For speakers there are countless options out there and you should look for the ones that are suitable for both music and movies as suggested by audiotroy earlier. KEF, Paradigm, Martin Logan, Monitor Audio, Golden Ear Technology, B&W, PSB are great options for both music and home theater (movies). 

As several have already mentioned, without a budget and more info about the room, I can’t give you recommendations on specific equipment but I do have experience introducing a non-audiophile (my wife) to the benefits of a decent home theatre setup.

I definitely agree with what was said before about needing at least a 5.1 system to really get that “WOW” factor. My wife had never experienced surround sound and was initially a bit annoyed when I cut holes in the walls of the living room for surround speakers, but it took about two days for her to be totally won over by hearing effects from our favorite shows coming from behind us or in the room. She still after 3yrs occasionally darts a look over her shoulder and smiles about being fooled by it when an effect gives that immersive feeling...especially on a scary or suspenseful scene. It’s mid-fi, but she likes that room way more than another setup we have with much better stereo speakers & electronics but without the surrounds.

She was also annoyed by the “big black box” (an SVS SB2000) that “ruined” the aesthetics of the room...for about 36hrs until a scene in Game of Thrones where one of the dragons landing gave that sensation where you can feel it in your chest. She literally paused the show just to look at me and say “that was cool” and I’ve not heard a complaint about that big black box ever since. Total game changer compared to the micro sub from an old pioneer home theatre in a box that had been in the room before. So get a real subwoofer...or two :).

Depending on the budget, neither surround speakers or a decent subwoofer even need to give anything away to room aesthetics anymore as there are really good in-wall/in-ceiling options these days for both. I’m not suggesting the in-wall are better or as good for a given price point, but for surround and subwoofer channels where sound quality is less vital compared to the center and front R/L, they do a great job...especially if the room will have to stay multifunctional.

As as for electronics, my only suggestion is to keep it simple. Ideally have the whole setup controllable from a single remote &/or phone or tablet apps. Audiophiles might not mind getting up and sequentially turning on multiple components or having 5 different remotes to control every part of a home theatre system, but that’s annoying to most people. Also, be sure any receiver you get is 4ohm stable and has pre-outs in case they want to upgrade to a separate amp down the road...most decent ones will have both qualities, but some of the lower end models won’t.

A descent home cinema setup goes beyond 5.1 but that depends on the budget of course and how much the daughter likes movies and proper sound.
There are software programs who can help you

What a great challenge, let's build a system.
A couple of suggestions would be to keep the AV receiver newish so it handles all the current Codecs.

Older gear like meridian g68s or krell image and sound amazing but are limited to playing compressed file codecs.

You want to have Hdmi v2 at the least, moving forward.

What about high current solutions like Arcam although for the cheaper money they may be hdmi v1.4 ok but I would want v2.

Marantz gives an excellent hdmi hand shake, and they just simply work.
their new AV gear would
give all the connectivity in the would.
DLNA, wireless, blue tooth, network access and heos that could be expanded into the whole house.

An expansion in the future would be to add an external 7 channel amp, followed by another 5 channel (emotiva is affordable) and 2 or 4 ceiling speakers for atmos.
You could use in wall speakers in combination with in ceiling, with only the two fronts and centre taking up
 real estate.
Obviously if you chose the right current model Atmos capable unit you will be able to expand the system if so desired, once they get hooked on good AV experience (:

Try getting them hard wired in by lan line but configure the wirless phone and Tab integration with it all.

Know body uses discs any more, sure cover that base if that's what works,
I wouldn't bother, unless they have hundreds of DVDs and CDs and then I still wouldn't bother I'd just get it all ripped onto storage.

 An Invidia Shield will get them gaming and streaming plus hooked into their network.

What about a NAS for storage. At least a 4 bay with 3tb drives or bigger.

A Zippidy is suppose to be a good media player also, it will play everything I am told.

The new Marantz has streaming capabilities equivalent to blue sound 2 for music streaming.... bonus.

What about Fronts with subs in them, as someone else mentioned, Def tech.
They are designed for theatre and aren't too dear.
Also Parridym, M and K, 

Recent Sony top of the range LEDs  have powerful processors and give great image and  brightness at affordable pricing on special. A fraction of the expense of LG oled.

HOWEVR if you could afford a Lg oled
 C8 65 " it would become the jewel in the system. Love my c8 77" (:
.
Finally at least $5 - $10 as much as $20 per m for the fronts and centre per m on speaker cables and maybe some Audioquest cinnamon hdmi leads, they want to be decent as so information travels along them.

Good luck and enjoy !!!