The words "multi home gym" are to a weightlifter what Bose is to an audiophile or Lorcin to a gunsmith. A bad thing. For your budget, you can get a nice power rack, a sturdy bench, a good olympic bar, and [i]enough[/i] weights. With the power rack, you can safely bench press and do squats without a spotter. Also, you can put the bar at a convenient place to start the lift by moving the pins. I strongly recommend against a smith machine. Watch someone bench pressing or squatting. The bar does [b]not[/b] move in a straight line. Do you really want a smith machine forcing you to do something unnatural?
The next question is which power rack? About the cheapest thing on the market now is made by Body by Jake. It's $200 and sold at Dick's. It includes a cable attachment so you can do, for example, pulldowns and curls with the cable. My great-nephew just bought one and likes it. He only squats in the 300# range so I don't know how sturdy it is. A better quality one is available from Body Solid([url]www.bodysolid.com[/url]. It's about $300 for just the rack and about another $200 for the cable attachment. That's the rack I use. I found it cheap at a yard sale! More than once, I've dropped 400#+ on the safety bars without causing a problem. Before lifting, I do a few 1/4 squats with 6 plates on each side (45# each * 6/side *2 sides + 65 bar=595#). The pins hold the weight without a problem.
In case you don't know what a power rack looks like, here's a picture:
[img]http://www.bodysolid.com/showroom/freeweight/smith/wpr78.jpg[/img]