Spend most of the money on the speakers.
Use audiogon (or ebay) and buy an older integrated or even a receiver. People are dumping $2000 receivers on here for $500 because they are upgrading to HDMI. "Highend" receivers will have built in DACs that can be good, he could add a Mac Mini as a server and just run the toshlink out and be done. They also have bass management. Arcam's receivers are one of my favorite for music. Most receivers seem to lack a little soundstage when compared to good separates but it will make a good starter system. If he buys used you can always sell it in a year or two with no loss...
Anyway my point is to spend as little on the integrated as possible and buy good speakers. If he gets into it, he can sell the older cheap integrated or receiver and upgrade the front end later. Below are some cheap receivers I would use but there are lots of good integrated amps on this forum for sale. I have also added some links to some speakers.
Integrated/receivers:
Arcam AVR300 Receiver ($600, retail $2000)
http://www.audiogon.com/cgi-bin/cls.pl?miscrcvr&1310737034&/Arcam-AVR300-black--great-cond
Arcam A90 integrated ($700, retail $1900)
http://www.audiogon.com/cgi-bin/cls.pl?intatran&1309302614&/Arcam-A90-
Rotel RSX-1055 ($350, retail $1300)
http://www.audiogon.com/cgi-bin/cls.pl?miscrcvr&1310715132&/Rotel-RSX-1055-Rotel-Receiver
Speakers:
Below are a few speakers that would be good.
Usher CP-6381 ($1450, $3400 retail)
http://www.audiogon.com/cgi-bin/cls.pl?spkrfull&1311003705&/Usher-CP-6381-glossy-black-w/-
Dynaudio Contour S1.4 Speakers ($1400, $2800 retail)
http://www.audiogon.com/cgi-bin/cls.pl?spkrfull&1310923567&/Dynaudio-Contour-S1.4-Speakers
Dynaudio contour 1.8 mk ii ($1400, $3800 retail)
http://www.audiogon.com/cgi-bin/cls.pl?spkrfull&1310674826&/Dynaudio-contour-1.8-mk-ii-rea
B&W CM7 ($1250, $2000 retail)
http://www.audiogon.com/cgi-bin/cls.pl?spkrfull&1311255295&/B-W-CM7-Speakers
