Forget the smith machine. Check out http://www.newyorkbarbells.tv/powerracks.html for some good power racks at a decent price. Their basic setup is something like $350. Throw in a chin-up attachment for $40, a dipping attachment for $44 and a FID (flat, incline, decline) bench for $200 and you're talking less than $650 for pretty much everything you'll need (besides weights).
Get a quality power bar, a thick bar and enough plates and you're talking $1200 for your home gym. They have free shipping on everything except the bars and weights, and you can probably get those locally, except the thick bar. Not bad. This is probably the exact setup I'll get when I finally have my own place instead of an apartment (a few years down the road unfortunately).