As Schmange was saying, avoid run of the mill stuff from Best Buy or Target. You will pay through the nose for something very average !

A good rule of thumb is don't ever buy an all in one system with lots of flashing lights. Lights mean they have spent money on cosmetics rather than the sound...or to detract attention from sound that it is sub-standard ! You are getting a sound system, not a disco !

You can get some pretty cool stuff second hand (from a reputable dealer who offers some sort of warranty). Read reviews in HiFi mags but, like Lordofthestrings says listen with your eyes closed !

A good bit of advice is take a CD that you know very well and has been well recorded as a reference and get them to play it on a bunch of different systems.

I like Sheryl Crow's come on come on,
Wrong way up by John Cale and Brian Eno and
Vivaldi's four seasons.

Generally pop music is not to demanding however classical music which uses more of the frequancy spectrum.

Whilst shopping, you can listen to these recordings on high end stereos that have a price tag well above what you can afford and this gives you something to aim at.

Armed with an idea of what you are looking for it is time to decide on a budget, hit the second hand electronics stores and go shopping.

I went through my undergraduate and masters degree with a 100 buck system. It was crap but infinitely better than nothing !