a good lathe and mill

Try here http://www.blueridgemachinery.com/....under special sales.  They have a mill/drill that would fit nicely into your budget. 

You can always look for used good old school U.S.A. made machines like Southbend and Bridgeport.  They are well built and usually worth a little more, but you could pull in a 9" or 10" Southbend Lathe for $1200-$2400 with tooling.  The Bridgeport Mill would depend alot on condition, but could be had for $1000-$3000.

The school that I went to had some nice Logan lathes.  Simple to operate and the speeds could easily be changed from under the bench with a belt.

Tolgak wrote: Call me a n00b, but what exactly does a lathe do?

How exactly does a mill work?

I'd get an old Bridgeport , you can actually make parts to rebuild itself , way-guides and such , with a mill , but  it would be a strickly manual operation , for doing fancy CNC work, your looking in the neighborhood of 1-200K$ , Traveller had a good estimate on prices for both the lathe and mill .

Trog , a lathe ,, shapes metal by turning the metal past a stationary Bit , can make tubes out of pieces of round stock , can cut threads into that metal , grooves for O-rings , Sleeve bearings (and Barrel inserts ).

A mill is almost exactly the opposite , a turning bit travels past a stationary piece of metal , you can cut reliefs , dovetails  , keyways , make way guides (flat linear bearings , Brass ) and a Variety of other work with the proper holders and bits .

Both Very useful pieces of equipment for metalworking .

Nice lil lathe there , Enos , 7" swing and 12 inch length ? Heh, with a few mods on that thing , you could have a precision ID/OD grinder , Oh, isnt that outlet a bit overloaded ? He-He