Under $500? I'd go with a used 8-track DIGITAL recorder on eBay instead of a cassette. It would be used, but It would sound better (It depends what model you get, but cassette recorders are usually low low end). I wouldn't worry about knicks and scratches as much as quality. I'd go with a Roland VS-880 EXpanded HD (Hard Drive). Don't get one unless it's got the Expanded on it. The Expanded has all the effects, so it's totally self contained. This is VERY VERY good quality. Better than any pansy cassette recorder. But, even though the quality is very good, it only records 4 tracks at a time. If you could get around that, you couldn't go with a better deal.
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=890982222
Here's one right now going for $360. With the money you save, buy a Roland CD Burner on eBay as well. You can just plug your headphones in there, and record. Just check them out. There are a lot of good Digital Workstations out there. I just know personally that This model is quality, especially for a $500 budget. But, going with a cassette recorder when you can go for a better quality digital recorder would be dumb.
I'm not kidding. This is the way to go. Don't go with cassette. You won't get quality. Go with this setup. A Roland VS-880 Expanded HD on eBay. Wait for a great deal. Get a CD burner. Roland makes one that works along with the VS-880 for sale on eBay too. Make sure you get a manual. Not very hard to use. Search the internet about them. You won't hear any bad things. If you buy them at eBay, you'll be under $500 with both the recorder and CD burner.
If you really need to record 8 at a time, look for one that does that. But, you'll still be under $500 if you go with a digital one at ebay!!!
And, you don't need a seperate mixer. All you need is the recorder, headphones, and a CD burner! You can get it all in your budget. And, it's got this nice ping pong effect, so you can record 8 tracks, and bounce them to one track. That means you can put 8 tracks on one of eight tracks. So, you really can record up to 64 tracks with no down side, other than the fact that after you bounce them, you can't take it back, so they better be mixed right.