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If you are speaking about soundproofing I'm assuming you live in an apartment and have neighbours, I will be making my recommendations based in that assumption.
Also, note that I value audio quality more than video, so if I have a limited budget to setup a home cinema most of it will go to the audio.
For home cinema surround systems are usually the standard, however in my personal and subjective opinion surround adds much to the cost without really proving much value to the experience.
Cheap surround systems like those trendy soundbars will sound like shit comparable to a stereo system for the same price. Yes, they come with a subwoofer so they have bass and provide that wow factor, but you may notice it to be unbalanced the middle or upper frequencies to lack clarity.
If you have a small room and plan on watching films just yourself (and maybe an occasional friend)I recommend a setup similar to mine, a small LCD TV (32" or a bit bigger) and a pair of 8" studio monitors.
From my understanding cheap projectors have quite a substandard image quality and brightness, I understand that you prefer a projector for easier transport, but a small TV is also easy to carry it, you can literally carry it in the backsit of a small car. And will look much better than a cheap projector.
So with your given budget you can get a quality TV for about 500 dollars and a quality pair of near field speakers for another 500 dollars.
This is the perfect setup for a single person intimate setup, however fails short when you put multiple people in the room.
However if you have a big room with many people on it then you will need to compromise on quality, a bigger screen, maybe a projector and maybe a pair of loud used pair of HiFi speakers, since studio monitors aren't really meant to fill the room and 32" TV will look tiny from a sofa.