Well, I'm way late to the party, but my initial setup was about your $800 budget. Propellerhead Reason/Record @$169, M-Audio Firewire Solo @ $189, MXL 2001 @ $200 and Rokit KRK5's @ $300. I've upgraded Reason over the years, bought a pair of SM57s, made some semi-horrid recordings and then I found this site.
Once I figured out what I was doing wrong, I spent $1500 on room treatment and $700 on a pair of decent monitors. My mixes soared. Upgraded to the US1800 that was previously mentioned, got some Sennheiser HD380s on recommendation and am getting a lot better at tracking as well. Added a splitting mixer last month to tame the volumes and I'm finally getting the hang of not overcompressing. Everything helps, but when you start, you need to have a goal, and a budget, and get the best equipment you can afford by getting good advice.
AFA DAW. Reaper is a GREAT choice. I will repeat, GREAT choice. It's inexpensive ($60) and if you don't have a ton of experience with another, any DAW is as good as any other. If you have a lot of experience with a specific DAW, don't reinvent the wheel. Bear in mind I use REASON, not Reaper and I'm recommending it as a GREAT choice. But if you are choosing ProTools for some "Industry Standard" or whatever bogus reason, that's just hype.
Spend your money on a decent inexpensive mike (I noticed the 2001 that I use and love is under $100 now) and maybe a 57.
When you get out of the apartment and into a decent space get some room treatment, even if that's just buying 5 cases of Roxul and stacking up superchunks in the corners. If your room lies to you, it won't matter how good your skills are (my first mistake). But in the mean time, get some GOOD headphones. HD380s or even 280s, AT M50s, AKG K171s, Sony 7506s. All great gear. Avoid DJ and hyped (consumer grade) headphones.
Start with free plugins. Density MKIII for example, is one of the best compressors around, and it's free. Spline EQ and Blue Cat's Triple EQ are both outstanding. There's a lot you can pick up for free. May not be the best, but we're not budgeting to afford the best, just yet
Mostly, though, be happy with what you do. Spending a lot more than you planned is a quick way to feel pressured to use the stuff. Then it becomes a chore and not a pleasure. As always; Happy Recording