need help in buying/building a budget home theater

"The audio signal input to the HDMI input connector cannot be played on the AVR-390. Input the audio signal to the digital audio input connector or analog audio input connector." - AVR-390 Denon Manual.

does this mean I need to connect SPDIF and HDMI both from my Airtel HD STB? only HDMI is not enough?

AVR's HDMI ver is 1.3a
 
So, I ended up well within my budget by buying an used HTiB. It's Yamaha RX-V359 AVR with NS-P110 5.1 set. Looking all good for the moment.

Thanks you @elangoas, for answering my lots of questions and giving valuable inputs.
 
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