$1000 is stretching it if you want good quality. You might want to go into a studio with that money and record your CD there, and ask a ton of questions and learn what the engineer is doing. You'll have a good idea of what you need, as well as a good idea of what you'll be doing.
First, you need a recording interface. I recommend the Presonus Firepod, or Firestudio Project. Used they are around $300, new they're closer to $500. This is a good quality 8 channel Firewire interface with 8 mic preamps, 8 line outs, 8 line ins, and two instrument ins. It also has a good headphone amp.
For software, I recommend Reaper. It's basically free, but they encourage you to pay them $40. I plan on it once I get some spare money. It is very nice software with some good effects ( The compression and EQ are good, the reverb/chorus/delay/etc. aren't ). reaper.fm
For effects, I recommend Kjaerhus Audio. They have a line of Classic effects free to download which are VERY GOOD.
http://www.kjaerhusaudio.com/home.php
For guitar recording, I recommend an Audix i5. I normally would recommend the Shure SM57, but it is basically impossible to buy them used since a lot of them are counterfeits. The Audix i5 runs around $50-60 used. You might want to get two for more advanced guitar micing.
For bass, you can record direct and get a good sound, OR you can mic a cabinet. I recommend the Audix D6 mic for micing bass cabinet, I got mine for a little over $100 used.
For drums, well this is where it gets complicated. You want two good overhead mics ( Small Diaphragm Condensors work really well for this ). Audiopile has a pair of SDCs for $130 ( audiopile.net ), and they are pretty good. If you can swing the extra money for the whole drum mic set, do it. The mics aren't good, and you'll want to replace them as soon as you can, but the drum clips are very helpful.
You can use the Audix i5 on the snare, and the Audix D6 on kick drum. With the 4 mics set up right, in a good room, with a good drummer, and a well tuned kit, you'll get a good sound. You won't get really nice definition on each tom hit, but you'll hear them fine.
If you want to invest in tom mics, then I recommend Audix D2 for rack toms and Audix D4 for floor toms. They go for $60-70 used.
For vocals, a lot of people like to use large diaphragm condensor mics. Good ones are pretty pricey, so I just use a Shure SM57, which sounds good to me.
All of this gear is worthless if you can't hear what you're doing, so you need monitors. You can get a pair of KRK Rockit 5 active monitors for $200 new, but they aren't that great. I recommend stepping up and trying to get the Rockit 8 or 6 at least. You could easily spend your entire budget on a good set of monitors ( which I just did... and its worth it! ).
You need a pair of tracking headphones. Sennheiser HD280, while it doesn't sound great, is perfect for tracking. $50-60 used.
You need at least two mic stands, and at least 4 20' mic cables. If you buy from audiopile.net ( which I HIGHLY recommend ), the cables will be $50. The stands are $100 if you buy good stands ( which will last you for a long time, hold position well, are easy to adjust, sturdy, well balanced, etc. ), or $50 if you buy cheap stands ( which will break in 6-12 months, won't hold position, difficult to adjust... ). You'll also want a low profile stand for the bass drum. This is another $30.
Let's see, where are we at...
1) Interface - $300
2) Software - FREE!
3) Guitar Mic - $50/100
4) Bass Mic - $125
5) Drum Mics - $130/$250
6) Monitors - $200 new ( less used, if you can find them )
7) Headphones - $60
8) stands and cables - $180
Total: $1050 if you only get one guitar mic and you don't get any tom mics. This will give you all you need to get recording, with high quality mics and parts that you can continue to use even when you upgrade stuff. The only "throw-aways" on that list are the monitors.
Realistically, you can buy the interface, monitors, headphones, and guitar mics now, and get "demo" quality for everything. But saving up and buying the additional stuff is necessary if you want pro quality sound.
