I'm assuming you're going one track-at-a-time, so I'd look at an audiophile from m-audio as a sound card.
I'd also get n-tracks from
www.fasoft.com for multitrack recording. Does wavelab have multitrack recording? If so, then disregard the n-tracks suggestion.
For mics, I would get an sm 57 and/or a decent condenser - maybe a marshall v67 or a Studio Projects C1. Get an m-audio preamp to go with it - I like their dmp3 a lot, and the audio buddy is even pretty good.
You might want to think about picking up a POD or
a Behringer V-amp if you plan on tracking any guitars.
You'll probably also want some decent plugins . . . at least eq and compression/limiting. I would definitely look at Waves' Native Gold Bundle. If that's a little rich for your blood, then I would consider Sonic Timeworks. Maybe go to their web site
www.sonictimeworks.com and pick up their eq and compressor separately. Maybe throw in the Mastering Compressor (very similar to Waves' L1) if you have the cash to spare.
If you're working with electronic drums, then I'd also have a look at ACID - program for piecing together drum loops and other samples.
That should be enough to get you up and running, and give or take a few items, it should fit right in to your price range.